What Should Be the Objective(s)of a Firm's Transfer Pricing Policy

question 53

Multiple Choice

What should be the objective(s) of a firm's transfer pricing policy?

• A)Ensure a secure source of inputs at the best price possible.
• B)Promote goal congruence, while maintaining divisional autonomy so that accurate performance evaluation can be made.
• C)Develop a cooperative relationship between divisions, while maintaining enough competitiveness to ensure the survival of the firm.
• D)Develop a pricing system that facilitates good record keeping that is acceptable under GAAP.

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Definitions:

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Organization's Environment

Refers to both the internal and external factors that affect how an organization operates and its ability to achieve its goals.

Complexity

A characteristic of systems or problems that exhibit multiple interrelated components and variables, which can lead to unpredictable outcomes and difficulties in understanding or solving.

Configuration

The arrangement or setup of the components of a system or object.