In setting a transfer price, which of the following should not be considered?
A)Fixed production costs of the buying division.
B)Production capacity of the selling division.
C)Product demand from outside customers.
D)Costs eliminated by internal transfers.

Question

Quizplus · Accepted Answer

Fixed production costs of the buying division are not relevant to setting a transfer price, as they do not change with the transfer decision.

In Setting a Transfer Price, Which of the Following Should