Which of the Following Is Not Considered Criteria Used by Managers

question 46

Multiple Choice

Which of the following is not considered criteria used by managers to evaluate transfer prices?

• A)Promotes goal congruence.
• B)Induces managers to exert a high level of effort.
• C)Helps top management evaluate the performance of individual subunits.
• D)Preserves a high degree of subunit autonomy in decision making if top management favors a high degree of decentralization.
• E)Subunits selling a product of service should not be motivated to hold down their costs.

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Definitions:

Total Revenue

The complete total of earnings a firm gains through product sales or service charges over a set period.

Total Cost

The complete cost of production, including both fixed and variable costs. It represents the entire expense incurred in producing a good or service.

Free Entry

A market condition where firms can enter the industry without any barriers to entry, promoting competition.

Exit

In economic terms, the process of withdrawing from a market, ceasing operations, or ending an investment.