The primary objective in setting transfer prices is to ________.
A) maximize profits for the company as a whole
B) maximize profits for the selling division
C) minimize the cost to the purchasing division
D) maximize profits for the purchasing division

Question

Quizplus · Accepted Answer

The primary objective in setting transfer prices is to maximize profits for the company as a whole. This means that the transfer price should be set at a level that allows both the selling and purchasing divisions to maximize their profits, while also ensuring that the company as a whole is benefiting from the transaction. Setting transfer prices solely to maximize profits for one division can negatively impact the overall profitability of the company.

The Primary Objective in Setting Transfer Prices Is to ________