Briefly Describe the Conditions That Should Be Met for Market-Based

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The Answer is The conditions for which market-based transfer pricing is likely to lead to optimal decision making are: (1) the market for the intermediate product is perfectly competitive, (2) interdependencies of the subunits are minimal, and (3) there are no additional costs or benefits to the company as a whole from buying or selling in the external market instead of transacting internally.
In a perfectly competitive market, the market-based transfer prices promote goal congruence, motivate the management to take the same actions as if they were transacting externally, evaluate subunit performance, and preserve subunit autonomy.

Briefly Describe the Conditions That Should Be Met for Market-Based

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Briefly Describe the Conditions That Should Be Met for Market-Based

Essay

Correct Answer:VerifiedShow Answer

Correct Answer:
Verified