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Advantage of using budgeted costs for transfer pricing a

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Please help with the following problem. Provide explanations.

1-An advantage of using budgeted costs for transfer pricing among divisions is that:

A. overall corporate profitability is usually higher.

B. it usually provides a basis for optimal decision making.

C. the divisions know the transfer price in advance.

D. it promotes subunit autonomy.

_________________________________________________________________________

2-Negotiated transfer prices are often employed when:

A. market prices are stable

B. market prices are volatile.

C. market prices change by a regular percentage each year.

D. goal congruence is not a major objective.

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Slect the correct answer and why?

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Solution Summary

This response discusses the advantage of using budgeted costs for transfer pricing. Multiple choice questions are answered with explanations.

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1 - An advantage of using budgeted costs for transfer pricing among divisions is that:

C. the divisions know the transfer ...

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