Answer as true (T) or false (F). If the answer is false, change the statement to make it true.

1. ______ The market price is the maximum transfer price that a buyer from within the same company should be willing to pay.

2. ______ At a minimum, the selling division should recover the incremental (that is, variable) cost of producing and selling the product.

3. ______ The only time that using a market price as a transfer price makes sense is when the selling division is operating at its full capacity and cannot fill the order without giving up sales to eternal customers.

4. ______ Using the negotiation method, the final transfer price will depend on the relative power of buyers and sellers, their negotiation skills, and how much inside information each has about the other divisions cost, capacity, and demand.

5. ______ A transfer price is the amount one company charges when it sells goods or services to another company in the same country.