Indopharm has a Bulgarian marketing subsidiary that complains that export price escalation makes the firm's products too expensive to sell in Bulgaria.The subsidiary wants the firm to adjust he transfer price to Bulgaria.What should Indopharm do about the transfer price?
A)Increase it.Tariff costs will decrease.
B)Decrease it.Tariff costs will decrease.
C)Decrease it.Transportation costs will decrease.
D)Do nothing.Transfer prices do not affect either transport or tariff costs.

Question

Quizplus · Accepted Answer

If Indopharm decreases the transfer price, it will make the products more affordable for the Bulgarian market, and the subsidiary will be able to sell more products. This, in turn, will reduce the overall inventory and storage costs, making it easier and cheaper to manage the subsidiary's operations. Additionally, the lower transfer price will also help reduce the tariff costs, making the products more competitive in the local market. Therefore, decreasing the transfer price is the best solution for Indopharm to address the subsidiary's concern.

Indopharm Has a Bulgarian Marketing Subsidiary That Complains That Export