A ________ is the amount that one division charges when it sells goods or services to another division within the same company.
A)residual income
B)negotiated price
C)related price
D)transfer price

Question

Quizplus · Accepted Answer

A transfer price is the amount that one division of a company charges another division for goods or services. It is used to determine the profitability of each division and to incentivize them to act in the best interest of the company as a whole. The transfer price can be negotiated or set by management, but it should be a fair market value to avoid distorting the actual profits of each division.

A ________ Is the Amount That One Division Charges When