Which of the following is true of transfer pricing?
A) It creates costs for the selling subunit.
B) It creates revenues for the buying subunit.
C) It helps top managers evaluate the performance of individual subunits.
D) It makes managers' information-processing and decision-making tasks difficult.

Question

Quizplus · Accepted Answer

Transfer pricing helps top managers evaluate the performance of individual subunits by setting a price for the transfer of goods or services between those subunits. This internal pricing mechanism allows for the assessment of profitability and efficiency of different parts of the organization, aiding in performance evaluation and strategic decision-making.

Which of the Following Is True of Transfer Pricing