The lower the transfer price,

Question

Quizplus · Accepted Answer

The transfer price refers to the price charged by one division of a company for goods or services provided to another division of the same company. If the transfer price is lower, the transferring division will report a lower gross profit relative to the receiving division, resulting in a lower net profit reported by the MNC (option A is incorrect). Therefore, the lower the transfer price, the lower the gross profit of the transferring division relative to the receiving division (option B is correct). Additionally, the higher transfer price would result in the opposite effect (option C is incorrect).

The Lower the Transfer Price