Suppose that the frozen foods division of Swanson purchases food trays and boxes from the packaging division. The form of pricing used to charge the frozen foods division is called
A) zone pricing.
B) base-point pricing.
C) business-unit pricing.
D) transfer pricing.
E) price discrimination.

Question

Quizplus · Accepted Answer

The pricing form used to charge the frozen foods division for the food trays and boxes purchased from the packaging division is called transfer pricing. Transfer pricing is used when a company has different divisions that engage in transactions with one another, and it involves determining a price for goods or services exchanged between these divisions.

Suppose That the Frozen Foods Division of Swanson Purchases Food