What is the general rule for determining transfer prices on transferred products between segments of a company? The transfer price equals ________ plus ________.
A) fixed costs; opportunity costs
B) outlay cost; sunk cost
C) outlay cost; variable cost
D) outlay cost; opportunity cost

Question

Quizplus · Accepted Answer

The general rule for determining transfer prices on transferred products between segments of a company is that the transfer price equals the outlay cost plus the opportunity cost. Outlay cost refers to the direct costs incurred in producing the product or service, while opportunity cost refers to the foregone revenue or profit that could have been earned by selling the product or service in the external market. Therefore, option D correctly identifies the two components that make up the transfer price.

What Is the General Rule for Determining Transfer Prices on Transferred