The pricing of a product at each stage of production as the product moves through several stages is called
A)transfer pricing.
B)cost plus pricing.
C)penetration pricing.
D)monopolistic pricing.

Question

Quizplus · Accepted Answer

Transfer pricing is the pricing of goods or services when they are transferred from one division, department, or entity to another within the same company. It is used to determine the value of goods or services that are exchanged in intracompany transactions. This is relevant when a product is produced in different stages, departments, or locations within the same company. Therefore, transfer pricing is the best choice that supports the scenario given in the question.

Option B) Cost plus pricing is a pricing strategy where the cost of producing a product is calculated, and a markup is added to determine the final price. This method is suitable when a company wants to ensure that they are covering their costs and making a profit.

Option C) Penetration pricing is a pricing strategy where a company charges a low price for its product initially to gain market share. This method is suitable when a company wants to attract customers and establish itself in the market.

Option D) Monopolistic pricing is a pricing strategy used by a monopolistic firm, where the firm has control over the price of the product. This method is not relevant for the scenario given in the question.

The Pricing of a Product at Each Stage of Production