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Standard costs rather than actual costs should be used in transfer-pricing methods because:

A. financial accounting rules (GAAP) require the use of standard costs.

B. tax rules require the use of standard costs.

C. standard costs are more readily available than actual costs.

D. standard costs facilitate a professionally negotiated, amicable settlement between the buying and selling divisions.

E.inefficient producing divisions could pass on their inefficiencies to buying divisions in the transfer price.

Respuesta :

Answer:

E.inefficient producing divisions could pass on their inefficiencies to buying divisions in the transfer price.

Explanation:

The transfer price refers to that price in which the one firm is charging the prices from the other firm with respect to the service rendered. It is based on price charged in the market

To find out the transfer price  we considered the standard cost instead of the actual cost as the divisions may be have more actual cost as compare to the standard cost which resulted into the inefficiency that impact the buying based on the transfer price

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