In a Time of Distress Prices, Which of the Following

Multiple Choice

In a time of distress prices, which of the following is TRUE?

A) The vendor division should set the transfer price at the distress price on a long-term basis for stability within the overall company.
B) The vendor division should cease production.
C) The purchasing division should pay normal prices.
D) In the short-term, the transfer price should be the distress price as long as this exceeds the incremental costs.
E) The distress price should be ignored as it is a function of the market, not of the internal capacities of the overall company.