What does a decentralized company expect from its transfer pricing system?
A) to increase the transferring segment's profits only
B) to increase the buying segment's profits only
C) to increase the company's overall profits only
D) to increase the transferring segment's profits and the company's overall profits

Question

Quizplus · Accepted Answer

A decentralized company expects its transfer pricing system to increase the transferring segment's profits and the company's overall profits. This is because a decentralized company is typically organized into multiple segments, each of which is responsible for its own profits. The transfer pricing system is used to allocate costs and revenues between the segments, and it can be used to encourage the segments to make decisions that are in the best interests of the company as a whole.

What Does a Decentralized Company Expect from Its Transfer Pricing