CIMAPRO19-P02-1 Exam - Topic 4 Question 118 Discussion

Actual exam question for CIMA's CIMAPRO19-P02-1 exam

Question #: 118
Topic #: 4

Division A and Division B are divisions of the same group. Division A transfers all of its output to Division B.

Which THREE of these alternative transfer pricing bases will prevent any cost inefficiencies in Division A being passed on to Division B?

AStandard variable cost

BActual full cost

CActual prime cost

DMarket price

EActual variable cost

FStandard variable cost plus a profit margin

Show Suggested Answer

Suggested Answer: A, D, F

by Merlyn at Oct 29, 2025, 08:47 PM

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Angella

3 months ago

F) Standard variable cost plus a profit margin could work too, but it might complicate things.

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Ernie

3 months ago

E) Actual variable cost seems fair. It avoids unnecessary overheads.

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Rupert

3 months ago

I think D) Market price is the best choice. It reflects true market value.

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Emilio

4 months ago

Totally agree with A and D!

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Mariann

4 months ago

Wait, can we really avoid inefficiencies with these options?

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Shawna

4 months ago

E) Actual variable cost seems solid too.

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Leontine

4 months ago

I think D) Market price is the way to go!

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Gearldine

4 months ago

Haha, imagine if they went with "Actual Clown Cost" as an option. That would be a real circus!

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Levi

4 months ago

Hmm, A, D, and F look like the winners here. Can't have those pesky inefficiencies creeping in.

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Tony

5 months ago

A, D, and F are the way to go. Gotta keep that Division B happy!

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Lavonna

5 months ago

I’m leaning towards saying standard variable cost plus a profit margin is a good choice, but I can’t recall if it fully prevents inefficiencies.

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Joesph

5 months ago

I practiced a similar question where we had to choose between actual full cost and actual variable cost, and I think actual variable cost is more efficient.

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Gilma

5 months ago

I think standard variable cost might be one of the answers, but I’m a bit confused about how it compares to actual costs.

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Lachelle

5 months ago

I'd go with A, D, and F. Actual costs could still pass on inefficiencies.

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Pok

5 months ago

A, D, and F seem like the best options to prevent cost inefficiencies.

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Rozella

6 months ago

A) Standard variable cost is a good choice.

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Melinda

6 months ago

I prefer A) Standard variable cost. It keeps things simple and efficient.

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Lottie

6 months ago

I remember discussing how using market price could help avoid inefficiencies, but I’m not sure if it’s the only option.

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Jesusa

6 months ago

This is a good question to test our understanding of transfer pricing. I feel pretty confident I can identify the three correct options here.

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Isidra

7 months ago

Ah, I see now. Actual variable cost and standard variable cost plus a profit margin would also work to avoid passing on inefficiencies. Gotta remember those.

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