Which of the following describes the goal that should be pursued when setting transfer prices?
A) Maximize profits of the buying division.
B) Maximize profits of the selling division.
C) Allow top management to become actively involved when calculating the proper dollar amounts.
D) Establish incentives for autonomous division managers to make decisions that are in the overall organization's best interests (i.e., goal congruence).
E) Minimize opportunity costs.

Question

Quizplus · Accepted Answer

The goal of setting transfer prices is to encourage decisions that align with the overall organization's best interests, promoting goal congruence among autonomous division managers. This ensures that individual divisions work together in a way that maximizes the entire organization's performance rather than focusing solely on their own profits.

Which of the Following Describes the Goal That Should Be