Division a Transfers a Profitable Subassembly to Division B, Where

question 53

Multiple Choice

Division A transfers a profitable subassembly to Division B, where it is assembled into a final product. Division A is located in New Zealand, which has a high tax rate. Division B is located in Thailand, which has a low tax rate. Ideally, (1) which type of before tax income should each division report from the transfer and (2) what type of transfer price should be set for the subassembly?

---

Definitions:

Authoritarian Leadership

A leadership style characterized by individual control over all decisions and little input from group members.

Group Members

Individuals who belong to a specific group or organization, sharing common goals, interests, or characteristics.

Social Networks

Structures made up of individuals or organizations that are connected by one or more specific types of interdependency, such as friendship, kinship, common interest, financial exchange, likes, dislikes, knowledge, or prestige.

Organizational Environment

The external forces that affect an organization’s operation, including economic, legal, technological, and social factors.