When Middlemen Are Eliminated in the Channel and the Service

question 148

True/False

When middlemen are eliminated in the channel and the service is provided directly to consumers, this is referred to dysfunctional efficiency.

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Definitions:

Transfer Price

The cost at which divisions within the same organization trade goods and services with each other.

Operating Income

Earnings from a company’s primary business activities, excluding deductions of interest and taxes.

Variable Cost

Costs that vary directly with the level of production or output, such as raw materials and direct labor.

Transfer Price

The price at which goods and services are sold between divisions within the same company, often used for accounting and tax purposes.