Answered: Which is the best description of a dual…

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter10: Decentralization: Responsibility Accounting, Performance Evaluation, And Transfer Pricing

Section: Chapter Questions

Problem 12DQ: If the minimum transfer price of the selling division is less than the maximum transfer price of the...

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Which is the best description of a dual transfer price?

A) The receiving division is charged the market value of the item transferred while the supplying division is credited with the standard variable cost

B) The receiving division is credited the market value of the item transferred while the supplying division is charged with the standard variable cost

C) The receiving division is charged the standard variable cost transferred while the supplying division is credited with the market value of the item

D) The receiving division is credited the standard variable cost transferred while the supplying division is charged with the market value of the item

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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