ACCA PM · Chapter 14 · Question 6 of 10
Which of the following is a key objective of a transfer pricing system?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: C) Encouraging divisional managers to make decisions that are in the best interests of the company as a whole
Explanation
A good transfer pricing system should promote goal congruence, allow fair performance evaluation of each division and preserve divisional autonomy. Maximising one division's profit at another's expense, or always using full cost, can lead to dysfunctional decisions.
More Divisional performance and transfer pricing MCQs
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