In a Decentralized Company in Which Divisions May Buy Goods

question 17

Multiple Choice

In a decentralized company in which divisions may buy goods from one another,the transfer pricing system should be designed primarily to

• A)increase the consolidated value of inventory.
• B)allow division managers to buy from outsiders.
• C)minimize the degree of autonomy of division managers.
• D)aid in the appraisal and motivation of managerial performance.

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Definitions:

Privilege

The advantages or rights that are available only to a particular person or group of people.

Emotional Nature

An individual's characteristic way of feeling and expressing emotions.

Racism

Discrimination or prejudice directed against someone of a different race based on the belief that one's own race is superior.

Minimizing

The psychological strategy of downplaying or understating the significance of events or emotions, often as a coping mechanism.