The primary objective in setting transfer prices is to achieve goal congruence by selecting a price that will maximize the overall company profits.

Question

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The primary objective of setting transfer prices is to ensure that the divisional goals align with the overall company goals, thus achieving goal congruence. This is typically done by selecting a transfer price that maximizes the overall company profits rather than just the profits of the individual divisions.

The Primary Objective in Setting Transfer Prices Is to Achieve