When the transfer price chosen by management charges another department the price that would be charged to outside customers, this type of transfer pricing is called:

A) marginal cost transfer pricing.
B) cost-based transfer pricing.
C) market-based transfer pricing.
D) negotiated transfer pricing.

Transfer Pricing

The setting of prices for transactions between affiliated companies within the same multinational group, which can impact where profits are reported.

Market-Based

Pricing or decision-making strategies that are influenced primarily by market conditions and customer demand rather than internal cost considerations.

Marginal Cost

The cost of producing one additional unit of a product, which can include materials, labor, and other variable costs.