Question
For the following questions (13-18) about transfer pricing, assume the organization is X Co. Division S produces a component that can be sold to outside
For the following questions (13-18) about transfer pricing, assume the organization is X Co. Division S produces a component that can be sold to outside customers at a fair market price or to Division B at a transfer price. Division B uses the component to produce a finished product it sells to outside customers. Division B can also purchase the component from an outside supplier, Co. O at a fair market price.
A transfer pricing system should:
a. | maximize the transfer price | c. | maintain common and harmonious goals between the divisions and the entire firm |
b. | minimize the transfer price | d. | none of the above |
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