​When Considering Setting the Transfer Price at the Market Price

question 12

Multiple Choice

​When considering setting the transfer price at the market price of a product similar to the intermediate good that is already available on the market

• A)​It is important to recognize that the market price includes a margin above marginal cost
• B)It is OK if the product on the market includes costly features your downstream division does not use
• C)It is OK if the product on the market is inexpensive because its quality is lower than you use
• D)​If it is similar enough,it is justification for you producing it in-house

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Definitions:

Staff Planners

Professionals responsible for developing, implementing, and coordinating an organization's strategic and operational plans.

Communication Gap

A situation where there is a failure in properly exchanging information, leading to misunderstandings or conflicts.

Line Managers

Individuals in an organization who are directly responsible for managing employees and operations, often overseeing a specific department or area.

Scenario Planning

Planning that identifies alternative future scenarios and makes plans to deal with each.