Answered: When the selling division is a full…

When the selling division is a full capacity, the goal congruent transfer price will be the: market price actual full cost actual variable cost standard full cost actual variable cost plus markup

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter9: Responsibility Accounting And Decentralization

Section: Chapter Questions

Problem 19MC: A transfer pricing structure that considers the opportunity costs of selling to internal rather than...

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Question

When the selling division is a full capacity, the goal congruent transfer price will be the:

market price
actual full cost
actual variable cost
standard full cost
actual variable cost plus markup

Definition Definition System of assigning an estimated cost to the product (instead of the actual cost) so that the product cost can be determined well in advance and the pricing of the product can be done on time. Since the actual cost cannot be predicted at the initial stage of the production process, the estimated cost is recorded in the books. Any deviation of the estimated cost of the actual cost is adjusted in the books at the end of the period.

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