Transfer pricing is used in a multidivisional structure so that one division can sell its product or service to another division.

Question

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Transfer pricing refers to the pricing of goods or services that are transferred between different divisions or departments of the same company. This is commonly used in a multidivisional structure where one division may sell its product or service to another division within the same organization. This can help to allocate costs correctly and ensure that each division is operating efficiently. Therefore, the statement is true.

Transfer Pricing Is Used in a Multidivisional Structure So That