Setting effective transfer prices is relatively simply because division managers' strategic and economic considerations for the company as a whole are the same.

Question

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Setting effective transfer prices can be complex because division managers may have different goals and priorities than the company as a whole. They may want to maximize their own division's profits or minimize their division's costs, which may not align with what is best for the company overall. Therefore, careful consideration and communication are needed to set transfer prices that balance the interests of individual divisions with the goals of the company as a whole.

Setting Effective Transfer Prices Is Relatively Simply Because Division Managers