A general rule that will ensure goal congruence is to set the transfer price equal to the sum of the additional outlay cost per unit incurred because goods are transferred and the opportunity cost per unit to the organization because of the transfer.

Question

Quizplus · Accepted Answer

Setting the transfer price equal to the sum of the additional outlay cost plus the opportunity cost ensures that both the selling and buying divisions are no worse off due to the transfer. This aligns the incentives of both divisions with the overall goals of the organization, promoting goal congruence.

A General Rule That Will Ensure Goal Congruence Is to Set