The ___________ at which the company's products or inputs are traded internally can significantly cause errors in evaluating the profitability of proposed investments.

Question

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Transfer prices are the prices at which goods, services, or intellectual property are transferred between subsidiaries or departments within a company. The transfer price can significantly affect the profit margin of each subsidiary or department, and thus can cause errors in evaluating the profitability of proposed investments. For example, if a subsidiary sells products to another subsidiary at a higher transfer price than the market price, the buying subsidiary may appear less profitable than it actually is, and vice versa. Therefore, it is important to establish fair transfer prices that reflect the real market value of the products or services being transferred.

The ___________ at Which the Company's Products or Inputs Are