Indicate Whether Each of the Following Statements About Transfer Pricing

question 82

Short Answer

Indicate whether each of the following statements about transfer pricing is true or false.
A cost-based transfer price has the advantage of promoting efficiency and fairness.______
A market-based transfer price may be adjusted to take into account cost savings that occur as a result of sales being made within the company.______
A decentralized company should adopt a policy of requiring divisions in the company to make sales to other divisions when such sales will benefit the company as a whole.______
The level of capacity at which the selling division is operating should not affect the level of the transfer price for a sale to another division in the same company.______
Companies with operations in two or more countries sometimes try to set transfer prices at a level that will reduce their overall income tax bill.______

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Definitions:

Domains

Refers to specific areas of interest, expertise, or activity, such as technology, biology, or education, which are used for organizing knowledge or resources.

Performance

The level of accomplishment of a given task measured against preset known standards of accuracy, completeness, cost, and speed.

Aggregation

The process of combining multiple pieces of data or information into a single group or summary value.

Performance-Based Pay

A compensation system where an employee's pay is based on performance or the achievement of specific targets.