Which of the following statements is(are) true?
(A) If a transfer has no effect on divisional profit, managers will be indifferent between making the transfer or not.
(B) If an intermediate market exists but divisions are prohibited from buying or selling from the outside, the intermediate market can be ignored in determining the optimal transfer price.
A) Only A is true.
B) Only B is true.
C) Both of these are true.
D) Neither of these is true.

Question

Quizplus · Accepted Answer

If a transfer has no effect on divisional profit, managers will be indifferent to the transfer. When divisions can't trade externally, the intermediate market doesn't affect the transfer price decision.

Which of the Following Statements Is(are) True