All of the following are false about transfer pricing except:
A)using negotiated transfer pricing is always the best approach.
B)the cost approach can base the transfer price on either the variable cost or full absorption cost.
C)using the cost approach is always the best approach.
D)companies should always use the selling division's variable cost as the transfer price.
E)None of the answer choices is correct.

Question

Quizplus · Accepted Answer

The cost approach to transfer pricing can indeed base the transfer price on either the variable cost or the full absorption cost, making it a flexible method that can be adapted to different organizational needs and strategies.

All of the Following Are False About Transfer Pricing Except