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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