A transfer price is the price charged for a component by the selling division to the buying division of the same company.

Question

Quizplus · Accepted Answer

A transfer price is indeed the price charged for a component by the selling division to the buying division of the same company. This is done in order to facilitate internal transactions within the company and ensure that each division is properly accounted for in terms of profitability. The transfer price should be fair and reasonable, and in line with market prices for similar goods or services.

A Transfer Price Is the Price Charged for a Component