Is there an optimal transfer pricing policy that dominates all others?
A)Yes,managers strive to devise a textbook-perfect system regardless of cost-benefit considerations.
B)Yes,managers strive to devise a textbook-perfect system taking into consideration cost and benefits.
C)No,managers tend to settle for a system that seems to work reasonably well rather than devise a textbook-perfect system.
D)No,managers tend to settle for a textbook-perfect system,rather than devise a system that seems to work reasonably well.

Question

Quizplus · Accepted Answer

There is no one-size-fits-all optimal transfer pricing policy that dominates all others. The best choice for managers is to settle for a system that seems to work reasonably well, taking into consideration both the cost and benefits of implementing it. The cost of implementing a perfect system may outweigh the benefits, and therefore, it is more practical to settle for a system that works reasonably well.

Is There an Optimal Transfer Pricing Policy That Dominates All