One of the Potential Ways in Which Transfer Pricing Can

Multiple Choice

One of the potential ways in which transfer pricing can be established is to use market-based prices, which is often considered an alternative to cost-based transfer prices. In market-based costing, internal transfer prices may be based upon the same pricing structure offered to external customers. Of the choices provided below, which is most likely to be indicative of a pricing system such as market-based transfer pricing?

A) The minimum price as established by the seller
B) Variable manufacturing cost
C) Variable manufacturing cost plus fixed manufacturing cost
D) Variable manufacturing cost plus fixed manufacturing cost plus mark-up