The Primary Objective in Setting Transfer Prices Is to ________

question 213

Multiple Choice

The primary objective in setting transfer prices is to ________.

• A) establish a system that determines the best transfer prices for the company as a whole
• B) evaluate the managers of the responsibility centers involved
• C) achieve goal congruence by selecting a price that will maximize overall company profits
• D) make it easy for managers to select prices that maximize division profits

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Definitions:

Profitability

The state or condition of yielding financial gain or profit.

Forward Buying

The practice of purchasing larger quantities of goods than immediately needed, usually to take advantage of discounted prices or to ensure supply.

Peak Period

Times when demand for goods or services is at its highest, often requiring additional resources or strategies to meet customer needs.

Variable Demand

Variability in consumer demand over time, impacting production, inventory levels, and supply chain planning.