One of the Potential Ways That Transfer Pricing Can Be

Multiple Choice

One of the potential ways that transfer pricing can be established is to use market-based prices. This 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 cost-based transfer pricing?

A) Only fixed manufacturing costs
B) The maximum price established by the buyer
C) The minimum price established by the seller
D) Fixed manufacturing costs plus mark-up