Cost based transfer prices are the only price that a firm should use when transferring goods from one subunit to another subunit.

Question

Quizplus · Accepted Answer

Cost based transfer prices may not reflect the true market value of the goods being transferred and can lead to suboptimal allocation of resources within the firm. Alternative methods such as market based or negotiated transfer prices should also be considered depending on the situation.

Cost Based Transfer Prices Are the Only Price That a Firm