Posted by: Pdfprep
Post Date: March 12, 2021
Division A produces a product with a variable cost of $5 per unit and an allocated fixed cost of S3 per unit. The market price of the product is S15 plus 20 percent selling cost. Division B currently purchases this product from an external supplier but is going to purchase it from division A for S18.
Which of the following methods of transfer pricing is being used?
A . Market price.
B . Negotiation-based.
C . Full absorption cost
D . Variable cost
Answer: A
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