Which of the following is usually achieved when the general transfer-pricing rule is implemented?
A) Harmony
B) Perfect competition
C) Goal congruence
D) Cost measurement

Question

Quizplus · Accepted Answer

The general transfer-pricing rule aims to achieve goal congruence, which means aligning the goals and interests of different departments or subsidiaries within a company with the overall goals of the company. This is achieved by setting transfer prices at a level that encourages each unit to make decisions that maximize the company's overall profits, rather than just their own individual profits. Harmony and perfect competition are not typically achieved through transfer pricing, while cost measurement is a separate issue that can be addressed through other accounting methods.

Which of the Following Is Usually Achieved When the General