A general calculation method for transfer prices that achieves goal congruence begins with the additional outlay cost per unit incurred because goods are transformed and then
A) adds the opportunity cost per unit to the organization because of the transfer.
B) subtracts the opportunity cost per unit to the organization because of the transfer.
C) adds the sunk cost per unit to the organization because of the transfer.
D) subtracts the sunk cost per unit to the organization because of the transfer.
E) adds the sales revenue per unit to the organization because of the transfer.

Question

Quizplus · Accepted Answer

The correct method involves adding the opportunity cost per unit to the organization because of the transfer. This reflects the value of the next best alternative foregone as a result of the transfer, ensuring that the transfer price reflects both the additional costs incurred and the lost opportunity from not using the goods elsewhere.

A General Calculation Method for Transfer Prices That Achieves Goal