Which of the following statements regarding transfer pricing
is false?

When idle capacity exists, there is no opportunity cost
to producing intermediate products for another division.
Market-based transfer prices should be reduced by any
costs avoided by selling internally rather than externally.
No contribution margin is generated by the transferring
division when variable cost-based transfer prices
are used.The goal of transfer pricing is to provide segment managers
with incentive to maximize the profits of their divisions.

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