The price charged by one unit for a good or service provided to another unit within the organization is referred to as a(n)________ price.
A)substitute
B)transfer
C)department
D)organizational
E)budget

Question

Quizplus · Accepted Answer

The correct term is transfer price. It refers to the price charged by one unit for a good or service provided to another unit within the same organization. This is a common practice in decentralized organizations where different units operate as profit centers. The transfer price is important because it affects the profitability of both the selling and purchasing units. The main objective of transfer pricing is to ensure that each unit is evaluated based on its own performance and profitability.

The Price Charged by One Unit for a Good or Service