ABCO Corporation Has a Parts Division in Country A

Multiple Choice

ABCO Corporation has a parts division in country A. Its assembly division is in country B,which has a higher tax rate than country A. To minimize the corporation's overall income tax,how should ABCO set its transfer prices between its parts and assembly divisions?

A) The parts division should sell parts to the assembly division at low prices.
B) The parts division should sell parts to the assembly division at high prices.
C) It doesn't matter what transfer price is used because the divisions are part of the same company.
D) Transfer pricing has nothing to do with the total tax paid by the corporation.