A firm that charges a price to another unit in the company sets the ________ for goods that it ships to its foreign subsidiaries.
A) original price
B) margin price
C) customer value price
D) transfer price
E) break-even price

Question

Quizplus · Accepted Answer

The term used for the price charged by one unit of a company to another unit of the same company is called the transfer price. This price is set by the selling unit and impacts the profit and cost of goods sold for the buying unit. Therefore, the correct option is D) transfer price. The other options are not relevant to this scenario - A) original price is not the right term for this context, B) margin price and E) break-even price are not related to internal pricing, and C) customer value price refers to the value that customers place on a product, which is not the same as transfer pricing within a company.

A Firm That Charges a Price to Another Unit in the Company