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

Question

Quizplus · Accepted Answer

Transfer pricing is the form of pricing used when one division of a company sells goods or services to another division of the same company. Therefore, transfer pricing is the best choice here as the packaging division is selling goods to the frozen foods division of the same company. Geographic pricing is based on the location of customers, base-point pricing involves setting a price based on a specific location, business-unit pricing involves setting prices based on each separate business unit, and price discrimination involves charging different prices to different customers based on their willingness to pay. None of these other options accurately describe the scenario given in the question.

Suppose That the Frozen Foods Division of Amy's Purchases Food