What transfer pricing basis is considered a good estimation of differential cost plus opportunity cost?
A)Market price-based transfer pricing
B)Variable cost-based transfer pricing
C)Fixed price-based transfer pricing
D)Fixed cost-based transfer pricing

Question

Quizplus · Accepted Answer

Market price-based transfer pricing is considered a good estimation of differential cost plus opportunity cost because it reflects the price that could be obtained in an open market, thus incorporating both the variable costs and the opportunity costs of not selling externally.

What Transfer Pricing Basis Is Considered a Good Estimation of Differential