Transfer pricing is used most commonly in a
A) functional structure.
B) product team structure.
C) multidivisional structure.
D) matrix structure.
E) geographic structure.

Question

Quizplus · Accepted Answer

Transfer pricing is used most commonly in a multidivisional structure, where different divisions or business units may have to transact with each other, and transfer pricing ensures that each division is appropriately compensated for the goods or services that it provides to other divisions. This helps ensure that divisions are incentivized to operate efficiently and profitably, even when they are providing inputs to other parts of the organization. Transfer pricing is less commonly used in product team or geographic structures, which may be more focused on integrated, cross-functional teams rather than separate divisions or business units.

Transfer Pricing Is Used Most Commonly in a