In order for a firm to maximize its profit,
divisions should have autonomy to set intra divisional transfer prices YES
head office should impose transfer prices between divisions NO
Am I right?
CIMA Forums
Transfer Pricing
7y ago#1Wrong.
Head office should ensure that the company as an entity maximises profit and this will require it to set transfer prices. If divisions do it there is a chance that a division will maximise its own profit but that will not necessarily maximise company profit.
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