​The efficient transfer price is

A) ​the upstream division's average cost
B) the upstream division's marginal cost
C) the downstream division's average cost
D) ​the downstream division's marginal cost

Transfer Price

The price at which divisions of a company transact with each other, such as the sale of goods or services, often used for internal accounting.

Upstream Division

A segment within a company that focuses on the initial stages of production or the supply chain, such as raw materials acquisition.

Downstream Division

The section of a company involved with the processing, marketing, and sale of products derived from raw materials.