IMANET Exam CMA Topic 2 Question 35 Discussion

Actual exam question for IMANET's Certified Management Accountant exam

Question #: 35
Topic #: 2

[All Certified Management Accountant Questions]

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

ARequires internally developed information

BImposes market effects on company operations.

CRequires externally developed information.

DMay not promote long-term efficiencies.

Show Suggested Answer

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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