One disadvantage of using market prices as transfer prices between subsidiaries of a large company is that some subsidiaries may buy their materials from outside companies when, for the group as a whole, it would be better if they bought from other members of the group.

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This is because market prices can fluctuate and may not always reflect the best price for the group as a whole. As a result, subsidiaries may make decisions that are not in the best interest of the entire company, such as purchasing from outside companies instead of other subsidiaries within the group.

One Disadvantage of Using Market Prices as Transfer Prices Between