Economics · Economy
Which of the following is an advantage of a full cost plus transfer pricing policy?
- 1The mark-up discourages dysfunctional decision-making.
- 2It fixes a fair price if the selling division has spare capacity.
- 3The fixed costs of the selling division become the variable costs of the buying division.
- 4It ensures that all costs of the selling division are covered.✓
Correct answer
It ensures that all costs of the selling division are covered.
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