In Comparing the Three Basic Approaches to Transfer Pricing, Which

question 58

Multiple Choice

In comparing the three basic approaches to transfer pricing, which of the following statements would be true?

• A) A cost-based approach preserves subunit autonomy while negotiated transfer prices do not.
• B) Market-based transfer pricing motivates managers but negotiated prices do not.
• C) Cost-based transfer pricing systems are more difficult to implement and often make more time to implement than negotiated transfer pricing.
• D) Market-based transfer pricing achieves goal congruence when markets are competitive while cost-based can achieve goal congruence, but not always.

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Definitions:

Equitable Damages

Compensation awarded by courts for losses or harm that cannot be quantified by monetary standards alone, seeking to restore the injured party to their original position.

Executory Contracts

Agreements between parties that have yet to be fully performed or executed by one or more of the parties involved.

Conditional

Dependent on certain conditions or requirements being met before full effect or enforcement.

Partial Performance

An exception to the statute of frauds in which the performance of portions of an unwritten agreement by one or both parties can constitute proof that an oral contract exists between the parties.