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Which of the following is a legitimate disadvantage of a 100%-of-variable-cost transfer pricing? This price will not allow the selling division to make a long-run
Which of the following is a legitimate disadvantage of a 100%-of-variable-cost transfer pricing?
This price will not allow the selling division to make a long-run profit. | |
This price will discourage the purchasing division from buying internally. | |
At this price, if the selling division does not have excess capacity, the selling division will not wish to sell anything to the outside market. | |
If the selling division has excess capacity, this transfer price will often lead the purchasing division to act inconsistently with corporate goals. |
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