Which of the following is a problem with the use of cost-based transfer pricing?

A) It does not lead to optimal decisions for the firm.
B) There are many definitions of cost-based transfer pricing.
C) There are potential goal-congruence problems.
D) It does not lead to optimal decisions for the firm AND there are potential goal-congruence problems.

Cost-Based Transfer Pricing

A transfer pricing method where the price of goods transferred between departments or subsidiaries is based on the cost of production.

Goal-Congruence Problems

Issues that arise when the objectives of individual members or groups within an organization do not align with the overall goals of the organization, potentially leading to inefficiency or conflict.

Optimal Decisions

The best possible choices made after assessing all available information, resources, and alternatives, aiming to achieve the maximum benefit or efficiency.