Transfer Pricing Flashcards
What is the definition of a transfer price?
A The price of selling goods across divisions within the same company
B The price of selling goods outside the company
C The price to deliver goods and services overseas
D The price of moving resources within a division
A
Which of the following is the key consideration when setting a transfer price?
A Sunk cost
B Overhead cost
C Fixed cost
D Opportunity cost
D
Which of the following factors may lead a division to set a low transfer price?
A When the opportunity cost is high
B When the division is below capacity
C When the division is at capacity
D When the division has high variable costs
B
Which of the following is typically NOT used by companies to set a transfer price?
A Variable cost
B Fixed cost
C Full cost
D Full cost plus profit
B
Each of the following is an important consideration for transfer pricing EXCEPT:
A Taxation
B Total company profitability
C Investments returns
D Division profitability
C