A price charged for a component by the selling division to the buying division of the same company is called a(n)
A) transfer price.
B) economic value added.
C) market price.
D) cost-based price.
E) None of these.

Question

Quizplus · Accepted Answer

A price charged for a component by the selling division to the buying division of the same company is called a transfer price. Transfer prices are used to measure the performance of individual divisions within a company and to allocate costs between divisions. They are generally set at market prices or cost-based prices, depending on the company's internal policies and the nature of the goods or services being transferred.

A Price Charged for a Component by the Selling Division