The Goal of Setting a Transfer Price Is to

question 182

Multiple Choice

The goal of setting a transfer price is to

• A)Maximize the overall profit of the organization.
• B)Maximize the profit of the transferring division.
• C)Motivate managers to behave in the best interest of the firm as a whole.
• D)Ensure that all divisions have the products they need to operate.

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Definitions:

Liquidity

The ability of an asset to be quickly converted into cash without significantly affecting its market price.

Receivables Balance

The total amount of money owed to a company by its customers for goods or services delivered or used but not yet paid for.

Maker

In finance, the party that creates or issues a promissory note.

Petty Cash Fund

A small amount of cash kept on hand for minor or incidental expenses.