There is seldom a single transfer price that simultaneously meets the criteria of goal congruence, management effort, and subunit autonomy.

Question

Quizplus · Accepted Answer

This statement is true. It is generally difficult to have a single transfer price that satisfies all three criteria of goal congruence (i.e., aligning with overall company goals), management effort (i.e., motivating managers to achieve those goals), and subunit autonomy (i.e., allowing subunits to operate independently). This is because optimizing one criterion often comes at the expense of the other two. Therefore, companies must strike a balance that best aligns with their objectives.

There Is Seldom a Single Transfer Price That Simultaneously Meets