A Benefit of Using a Market-Based Transfer Price Is The

question 86

Multiple Choice

A benefit of using a market-based transfer price is the:

• A)profits of the transferring division are sacrificed for the overall good of the corporation
• B)profits of the division receiving the products are sacrificed for the overall good of the corporation
• C)economic viability and profitability of each division can be evaluated individually
• D)None of these answers is correct.

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Definitions:

Illusory Promises

Commitments made in a contract that are vague or unenforceable because they do not bind the promisor to a specific action.

Mutuality of Benefit

The principle that both parties involved in a contract or agreement must stand to gain from the arrangement for it to be valid and enforceable.

Promissory Estoppel

A legal principle that prevents a person from going back on a promise, even if it was not a formal contract, when the other party has relied on that promise to their detriment.

Legal Detriment

A loss or disadvantage that occurs to one party in a contract, considered a necessary component for a valid contractual agreement.