The Primary Objective in Setting Transfer Prices Is to ________

question 152

Multiple Choice

The primary objective in setting transfer prices is to ________.

• A) maximize profits for the company as a whole
• B) maximize profits for the selling division
• C) minimize the cost to the purchasing division
• D) maximize profits for the purchasing division

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Definitions:

Evaluation Period

The designated timeframe during which the performance, efficiency, or effectiveness of a project, program, or strategy is assessed.

Revenue-sharing Contract

An agreement between two or more parties that stipulates the proportion of revenue generated by a business venture to be distributed among the partners.

Consumer Demand

The desire and willingness of buyers to purchase goods and services at various price points.

Vertically Integrated

A company structure where the company owns its supply chain, from raw materials to the sale of the finished product, to control costs and quality.