The Level of the Transfer Price Can Affect the Overall

question 7

Multiple Choice

The level of the transfer price can affect the overall company because

• A) the higher the transfer price, the higher the operating income.
• B) it may impact on the taxes paid by the multinational company.
• C) the lower the transfer price, the lower the total costs.
• D) internal transfers are always costly to the firm.
• E) the transfer price may be higher than the cost-based price.

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Definitions:

Incidental Damages

Additional expenses or losses suffered by a party due to another party's breach of contract, beyond the direct damages.

Consequential Damages

In a contract, foreseeable damages that result from special facts and circumstances arising outside the contract itself. The damages must be within the contemplation of the parties at the time the breach occurs. Also called special damages.

Remedial Damages

Compensation aimed at remedying or compensating for a harm or injury suffered by the plaintiff, often used interchangeably with compensatory damages in a different context.

Substitute Goods

Products or services that can be used in place of each other, where an increase in the price of one leads to an increase in demand for the other.