Which of the Following Is an Advantage of Cost-Based Transfer $\quad$

Multiple Choice

Which of the following is an advantage of cost-based transfer prices?
I $\quad$ Managers do not have much incentive to reduce fixed costs
II $\quad$ Managers may be motivated to purchase goods and services from outside the company
IV $\quad$ Contribution margins may be split between buying and selling divisions

A) I only
B) II only
C) III only
D) None of the above (I, II, and III are all disadvantages)