Asked by ALESSANDRA MENDOZA on Sep 24, 2024
Verified
When the transfer price is increased
A) the buying division will chose to purchase less from the selling division
B) the buying division will chose to purchase more from the selling division
C) the selling division will chose to purchase less from the buying division
D) the selling division will chose to purchase more from the buying division
Transfer Price
The price at which goods and services are sold between divisions within the same company.
Buying Division
A dedicated department within a company that is responsible for making all purchase-related decisions and transactions.
Selling Division
A segment of a business organization responsible for the external sales of the company’s products or services.
- Acquire knowledge on how transfer pricing shapes buying and selling strategies inside a corporation.
Verified Answer
TE
Tiffany Edwardsabout 21 hours ago
Final Answer :
A
Explanation :
When the transfer price is increased, the buying division will choose to purchase less from the selling division as it becomes more expensive for them. They may look for alternative suppliers or find ways to reduce their usage of the product supplied by the selling division.
Learning Objectives
- Acquire knowledge on how transfer pricing shapes buying and selling strategies inside a corporation.