Cost-Based Transfer Pricing: Definition & Example


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question 1 of 3

What price is assigned a good that is transferred via cost-based transfer pricing?

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1. What can the worst-case scenario be for a firm that has subsidiaries that use cost-based transfer pricing?

2. What is the process by which subsidiaries transfer goods and assign prices?

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About This Quiz & Worksheet

This short test will gauge your understanding of cost-based transfer pricing by asking you a series of multiple-choice questions. Questions involve recalling detailed information about cost-based transfer pricing including both general knowledge of the concept and applying the concepts to concrete examples.

Quiz & Worksheet Goals

The purpose of this quiz is to see if you know:

  • Which price is given to a good that is transferred through cost-based transfer pricing
  • The worst-case scenario for a firm that uses cost-based transfer pricing
  • What term is used to describe the process in which subsidiaries transfer goods and assign prices
  • Generally what happens to selling subsidiaries in a cost base transfer pricing plan
  • Examples for which a manager won't leave a company that has cost-based transfer pricing

Skills Practiced

Here are some of the skills you will practice in our quiz:

  • Reading comprehension - ensure that you draw the most important information from the related cost-based transfer pricing lesson
  • Making connections - use understanding of the concept selling subsidiaries to make connections
  • Defining key concepts - ensure that you can accurately define main phrases, such as the term used to describe the process in which subsidiaries transfer goods and assign prices and the price that is given to a good that is transferred through cost-based transfer pricing
  • Information recall - access the knowledge you've gained regarding cost-based transfer pricing
  • Critical thinking - apply relevant concepts to examine information about cost-based transfer pricing's effect on managers in a different light

Additional Learning

If you would like to learn more about cost-based transfer pricing our Cost-Based Transfer Pricing: Definition & Example lesson is a great place to start. Whether you have an exam right around the corner, want to see what areas you're struggling with, or just want to get ahead, this professional quality lesson is a great opportunity for you. Learn about the following topics right from the comfort of your own home:

  • The ripple effect of cost-based transfer pricing
  • The drawbacks of cost-based transfer pricing
  • Real-world examples of cost-based transfer pricing and how it can affect a company
  • Profits that are usually short-lived with companies who use cost-based transfer pricing