Transfer pricing should equal A) selling price

Marketing Dec 20, 2020

Transfer pricing should equal

A) selling price.

B) opportunity cost.

C) total cost.

D) marginal cost.

Expert Solution

Answer: A) selling price.

Transfer price is determined in multiple ways, including negotiation. The price paid by one profit center should be equal to the price paid by external customers in an arm's length transaction, which is the selling price.

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