? Answer In segment reporting, transfer pricing betweensegments should be based ona)Cost onlyb)Market price only?c) The same basis used to actually priceintersegment transfersd)Standard cost only

Explanation of Segment Reporting: Segment reporting involves presenting financial information…

Answered: In segment reporting, transfer pricing…

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter9: Responsibility Accounting And Decentralization

Section: Chapter Questions

Problem 18MC: A transfer pricing arrangement that uses the price that would be charged to an external customer is...

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Similar questions

Determining the transfer price as the price at which the product or service transferred could be sold to outside buyers is known as the Oa. cost price approach Ob. negotiated price approach Oc. market price approach Od. revenue price approach
This transfer prices basis is considered to be the most inferior one a. variable cost transfer pice b. full cost transfer price c. negotiatied transfer price d. external market transfer price e. dual transfer price
What are considered direct costs in segment analysis?
A transfer pricing structure that considers the opportunity costs of selling to internal rather than external customers uses_______. A. the cost approach B. the general transfer pricing approach C. the market-based approach D. the opportunity cost approach
Discuss the advantages and disadvantages of a market-based transfer pricing approach.
Which of the following is one of the two approaches used to analyze data in the decision to keep or discontinue a segment? A. comparing contribution margins and fixed costs B. comparing contribution margins and variable costs C. comparing gross margin and variable costs D. comparing total contribution margin under each alternative
Select Among the choices, this transfer prices basis is considered as the most inferior one: a. variable cost transfer pice b. full cost transfer price c. negotiatied transfer price d. external market transfer price e. dual transfer price
In a transfer pricing decision, which of the following factors should be considered? Both A and B None of the above Market price and cost Negotiation and target profit
Which of the following transfer price approaches is used when the transfer price is set at the amount sold to outside buyers? a. variable price b. cost price c. negotiated price d. market price
ANSWER
The three common approaches to setting transfer prices include: the _____ price approach, where the transfer price is the price at which the product or service transferred could be sold to outside buyers; the _____ price approach allows the managers to agree among themselves on a transfer price; and the _____ price approach, where cost is used to set transfer prices. cost; market; negotiated market; cost; negotiated market; negotiated; cost negotiated; market; cost none of the above
When is it more appropriate to use market-based transfer price rather than cost-based transfer price?

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In segment reporting, transfer pricing between segments should be based on a)Cost only b)Market price only ? c) The same basis used to actually price intersegment transfers d)Standard cost only