What Is the Primary Problem with Using Discretionary Transfer Prices

question 19

Multiple Choice

What is the primary problem with using discretionary transfer prices to minimize costs in a decentralized organization?

• A) They don't really minimize tax costs.
• B) The appropriate transfer price to minimize costs cannot be determined by the parent company.
• C) The benefits of decentralization may be lost.
• D) They are extremely difficult to administer.

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Definitions:

Epidermis

The outer layer of the skin; literally over the true skin.

Abrasion

An injury caused by rubbing or scraping off the skin.

Foreign Material

Substances or objects present within an organism or system that are not naturally occurring or part of the system itself.

Forceps

An instrument used to grasp tissue and to clamp blood vessels.