When subunits work together,top management uses ________ to coordinate the actions of the subunits and to evaluate the performance of their managers.
A)transfer prices
B)single unit cost
C)dual pricing
D)multiple unit costs
E)hybrid pricing

Question

Quizplus · Accepted Answer

Transfer pricing is commonly used by top management to coordinate the actions of subunits and evaluate the performance of their managers. Transfer prices are internal prices that are charged when goods or services are transferred between subunits within the same company. By using transfer prices, top management can incentivize subunit managers to behave in ways that are consistent with the goals of the company as a whole, while also making sure that each subunit is fairly compensated for the goods or services that it provides to other subunits.

When Subunits Work Together,top Management Uses ________ to Coordinate the Actions