Transfer prices should be judged by whether they promote:
A)goal congruence.
B)the balanced scorecard method.
C)a high level of subunit autonomy in decision making.
D)Both A and C are correct.

Question

Quizplus · Accepted Answer

Transfer prices should promote goal congruence, which means aligning the goals and objectives of different divisions or units of an organization. This can be achieved by setting transfer prices that encourage cooperation and collaboration among different units rather than competition or conflict. Additionally, transfer prices should allow for a high level of subunit autonomy in decision making so that each unit can make decisions that are in their best interest without negatively impacting other units. Therefore, both options A and C are correct. The balanced scorecard method is not directly related to transfer pricing and is therefore not a relevant factor in judging transfer prices.

Transfer Prices Should Be Judged by Whether They Promote