A benefit of using a market-based transfer price is that the
A)profits of the transferring division are sacrificed for the overall good of the corporation.
B)profits of the division receiving the products are sacrificed for the overall good of the corporation.
C)decision making is optimal when the subunits depend on each other.
D)can be additional costs but the costs are less than the benefits.
E)economic viability and profitability of each division can be evaluated individually.

Question

Quizplus · Accepted Answer

Using a market-based transfer price allows for the economic viability and profitability of each division to be evaluated individually, which can be helpful in making strategic decisions about resource allocation and performance evaluation.

A Benefit of Using a Market-Based Transfer Price Is That