The Bookmark Company uses cost-based transfer pricing to transfer books from the publication division to its bookstores. The transfer price is based on a budget established at the beginning of the year. At the end of the year, the publication division had a cost over-run and its manager wants to charge the bookstores for the extra costs.

Under which of the following cases does the publication manager have a valid argument:

a. The cost over-runs were due to equipment failure.

b. The cost over-runs were due to rush orders from the bookstores.

c. The cost over-runs were due to the return of defective books.

d. The cost over-runs were due to lower demand for books than expected.