As the internal transfer price is increased,
A)overall corporate profits increase.
B)profits in the buying division increase.
C)profits in the selling division increase.
D)profits in the selling division and the overall corporation increase.

Question

Quizplus · Accepted Answer

When the internal transfer price is increased, the profits in the selling division increase. This is because the selling division is charging a higher price for the goods or services they are providing to the buying division, which increases their revenue and profit. However, this does not necessarily mean that overall corporate profits increase, as the increased cost for the buying division may hurt their profits.

As the Internal Transfer Price Is Increased