The choice of a transfer-pricing method has minimal effect on the allocation of company-wide operating profit among divisions.

Question

Quizplus · Accepted Answer

The choice of a transfer-pricing method can have a significant impact on the allocation of company-wide operating profit among divisions. Different methods can result in different profit allocations, which can affect the incentives and behaviors of the divisions. It is important for a company to carefully choose a transfer-pricing method that aligns with its objectives and promotes efficient resource allocation.

The Choice of a Transfer-Pricing Method Has Minimal Effect on the Allocation