Which of the Following Transfer-Pricing Methods Can Lead to Dysfunctional

question 73

Multiple Choice

Which of the following transfer-pricing methods can lead to dysfunctional decision-making behavior by managers?

• A) Variable cost.
• B) Full cost.
• C) External market price.
• D) A professionally negotiated, amicable settlement between the buying and selling divisions.
• E) None of the answers is correct.

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Definitions:

Availability Heuristic

Estimating the frequency or likelihood of an event based on how easy it is to recall relevant information from memory or how easy it is for us to think of related examples.

Self-Fulfilling Prophecy

The tendency of one’s expectations to affect one’s behavior in such a way as to make the expectations more likely to occur.

In-Group

A social group to which an individual identifies as being a member, fostering a sense of belonging and identity among its members.

Out-Group

Out-Group refers to social groups with which an individual does not identify, often perceived as different or separate from one’s in-group, which can affect attitudes and behaviors towards members of these groups.