When a transfer price is set higher
A)the buying division will chose to purchase less from the selling division
B)the buying division will chose to purchase more from the selling division
C)the selling division will chose to purchase less from the buying division
D)the selling division will chose to purchase more from the buying division

Question

Quizplus · Accepted Answer

If the transfer price is set higher, the buying division will choose to purchase less from the selling division because it will be more expensive for them to do so. They may look for alternative suppliers or try to negotiate a lower price with the selling division.

When a Transfer Price Is Set Higher