Author Question: The goal of setting a transfer price is to (Read 51 times)

Facerro · **on:** Feb 5, 2023

Question 1

Which of the following is the formula for setting a minimum transfer price?
◦ Sales less variable cost
◦ Variable cost to produce/sell + allocated fixed costs
◦ Contribution less income taxes and interest
◦ Variable cost to produce/sell + contribution margin forgone from the transfer

Question 2

The goal of setting a transfer price is to
◦ maximize the profit of the transferring division.
◦ maximize the overall profit of the organization.
◦ ensure that all divisions have the resources they need to operate.
◦ motivate managers to behave in the best interest of the firm as a whole.

spicyzack · **Reply #1 on:** Feb 5, 2023

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