Transfer pricing does NOT affect divisional profits.

Name: Transfer pricing does NOT affect divisional profits.
Brand: Quizplus
Rating: 4.8 (25 reviews)

Question

Quizplus · Accepted Answer

Transfer pricing refers to the pricing of goods or services transferred between different units or divisions within a company. If the transfer price is set higher than the cost of production, the selling division can make a higher profit, while the buying division may experience a lower profit margin. Therefore, transfer pricing can affect divisional profits.

Transfer Pricing Does NOT Affect Divisional Profits