A transfer-pricing method leads to goal congruence when ________.
A) there is a price difference in different markets due to market inefficiencies
B) managers do no act for their own best interest and work for the long-term best interest of the manager's subunit
C) managers act in their own best interest and the decision is in the long-term best interest of the company
D) there is a low degree of centralization

Question

Quizplus · Accepted Answer

Goal congruence occurs when managers act in their own best interest while also making decisions that are in the long-term best interest of the company. In transfer pricing, this means that managers set prices that maximize profits for their subunit while also ensuring that the company as a whole benefits. Therefore, the correct answer is C.

A Transfer-Pricing Method Leads to Goal Congruence When ________