Setting Transfer Prices Can Be Especially Problematic When

question 34

Multiple Choice

Setting transfer prices can be especially problematic when

• A) Managers are evaluated based on non-financial factors
• B) Compensation is tied to the financial performance of responsibility centres
• C) Centralised decision making is the organisational norm
• D) Compensation is tied to the financial performance of the organisation as a whole

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Definitions:

Inflation Rate

The pace at which the average cost of goods and services increases, leading to a reduction in buying power.

General Level

A term that might refer to the overall state or condition of something, but not a specific financial term.

Prices For Goods

The amount of money required to purchase products, which can fluctuate based on factors like supply, demand, and inflation.

Interest Rates

The amount charged by a lender to a borrower for the use of assets, usually expressed as a percentage of the principal.