Which of the following statements is tme about transfer pricing in the context of multidivisional organizational structure?
A)It can severely damage coordination and corporate culture.
B)It occurs when one division's products are priced higher than another division's products.
C)It often results in a uniform increase in profitability among all the divisions.
D)It refers to the changes in product prices that occur when certain functions from the divisions are centralized.
E)It helps corporate managers create the maximum profitability out of the multidivisional strategy.

Question

Quizplus · Accepted Answer

Transfer pricing can create a competitive environment among divisions that can damage coordination and corporate culture. This is because the divisions may start focusing on their own profitability at the expense of overall corporate goals.

Which of the Following Statements Is Tme About Transfer Pricing