Which of the Following Is an Advantage of Cost-Based Transfer

Multiple Choice

Which of the following is an advantage of cost-based transfer prices?
I. Managers do not have much incentive to reduce fixed costs
II. Managers may be motivated to purchase goods and services from outside the company
III. 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)