If a product has an external market and divisions are treated as profit centers, cost-based transfer prices can often lead to suboptimal decisions.

Name: If a product has an external market and divisions are treated as profit centers, cost-based transfer prices can often lead to suboptimal decisions.
Brand: Quizplus
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Question

Quizplus · Accepted Answer

Cost-based transfer prices may not reflect market conditions, leading divisions to make decisions that do not maximize overall company profit.

If a Product Has an External Market and Divisions Are