The higher the transfer price

Question

Quizplus · Accepted Answer

A transfer price is the price at which goods or services are transferred between different departments or divisions of the same company. If the transfer price is high, it means that the transferring division is charging a higher price for its goods or services, which will increase its gross profit relative to the receiving division. Therefore, the answer is C - the higher the gross profit of the transferring division relative to the receiving division. A transfer price does not directly impact the net profit reported by the MNC (A), and it does not necessarily affect the gross profit of the receiving division (B).

The Higher the Transfer Price