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IMANET CMA Exam - Topic 2 Question 35 Discussion

Which of the following is the most significant disadvantage of a cost-based transfer price?
C) Requires externally developed information. and D) May not promote long-term efficiencies.
A) Requires internally developed information
B) Imposes market effects on company operations.

IMANET CMA Exam - Topic 2 Question 35 Discussion

Actual exam question for IMANET's CMA exam
Question #: 35
Topic #: 2
[All CMA Questions]

Which of the following is the most significant disadvantage of a cost-based transfer price?

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Suggested Answer: C, D

A cost-based transfer price is a price charged in an intracompany transaction that covers only the selling subunits costs. However, by ignoring relevant alternative market prices, a company may pay more than is necessary to produce goods and services internally.


by Kattie at May 04, 2022, 01:36 AM

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Viva
8 months ago
B is a concern too, but not the biggest one.
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Fletcher
9 months ago
Wait, how can D not promote long-term efficiencies? Sounds off.
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Cherelle
9 months ago
Totally agree with A!
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Viki
9 months ago
I think D is more significant.
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Sarah
9 months ago
A is definitely a big issue.
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Shoshana
9 months ago
I feel like option B could be relevant too, since market effects can really impact how a company operates, but I’m not confident about that.
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Francisca
9 months ago
I’m a bit confused about whether requiring internally developed information is really a disadvantage. It seems like it could be both good and bad.
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Rene
9 months ago
I remember a practice question that mentioned how cost-based pricing can lead to inefficiencies, so I’m leaning towards option D.
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Eve
9 months ago
I think the biggest issue with cost-based transfer pricing is that it might not promote long-term efficiencies, but I'm not entirely sure.
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Margery
9 months ago
Okay, I think I've got this. The key is to configure the tunnel interface with the right color on all three controllers. Option A looks like the way to go here.
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Solange
9 months ago
I'm a bit confused by the wording of this question. Is "account current" the same as "account reimbursement"? I'll have to double-check the definitions to make sure I select the right answer.
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Alida
10 months ago
For this setup, I'd recommend using LACP mode active. That way, the Nexus switches will actively negotiate the link aggregation with the servers.
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