A. Production centers are not always responsible for revenues and costs so the transfer prices that are used would not always affect a production center.

B. A profit center is responsible for both revenues and costs (and therefore profit). A transfer price, whether received as revenue or paid as a cost, does affect a profit center; and a profit center is the most fundamental (basic) responsibility center that would be affected.

An investment center, which is responsible for revenues, costs and investment, would also be affected by transfer prices; but an investment center is not the most basic, or fundamental, responsibility center to be affected by transfer prices.

C. While an investment center would be affected by the transfer prices being used, an investment center is not the most fundamental (basic) of the centers that is affected by transfer prices.

D. A cost center is not responsible for revenues, so it would not be affected by transfer prices.