Market-based transfer prices are helpful when ________.
A) the product is specialized
B) the internal product is different from the products available externally in terms of its quality
C) the interdependencies of subunits are minimal
D) the markets are not perfectly competitive

Question

Quizplus · Accepted Answer

Market-based transfer prices are most effective when the interdependencies of subunits within an organization are minimal. This allows the internal exchange of goods or services to mimic external market transactions, making the transfer price reflective of what could be obtained in an open market. When products are specialized, quality differs significantly from external products, or markets are not perfectly competitive, market-based transfer prices may not accurately reflect the value of internal transfers.

Market-Based Transfer Prices Are Helpful When ________