Transfer prices may be used when decentralized units are organized as cost, profit, or investment centers.

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Transfer prices are often used in decentralized organizations where different departments or units function as cost, profit, or investment centers. The transfer price is the amount charged by one unit to another unit in the same organization when goods or services are transferred between them. This allows for better cost allocation and helps in measuring the performance of individual units.

Transfer Prices May Be Used When Decentralized Units Are Organized