The "Floor" in Transfer Pricing Is

question 129

Multiple Choice

The "floor" in transfer pricing is

• A)the transfer price that would leave the buying division no worse off if an input is purchased from an internal division.
• B)the transfer price that would leave the selling division no worse off if the good is sold to an internal division.
• C)the transfer price that would leave the buying division worse off if an input is purchased from an internal division.
• D)none of these.

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Definitions:

Profit Margin

A financial metric indicating the percentage of revenue that exceeds the cost of goods sold, showcasing the profitability of a company or product.

Operating Income

The profit realized from a business's core operating activities, excluding deductions of interest and taxes.

Invested Assets

Assets that are purchased or acquired for the purpose of generating income or appreciating in value.

Managerial Efficiency

Refers to the effectiveness with which managers utilize resources to achieve an organization's objectives and optimize operations.