Question

Transfer prices are needed when:

Question 14 options:

A)	firms purchase raw materials from other firms.

B)	consumers sell goods and services to one another.

C)	markets must be simulated within firms.

D)	products are bundled and sold as a package.

E)	firms charge different prices to customers where there are no differences in production costs.

Answer 1

ANSWER :: (C) Markets Must be Simulated Within Firms.

=> Explanation ::

Transfer Prices Are Needed When Firm Purchased Or Sell Material Or Goods Within The Firm or Subsidiary Firm Or Firm Which Is Regulated Under The Main Firm. It Is Mandatory to Have A Same Ownership Of Both Firms For Transfer Prices. In Transfer Prices Market Must Be Simulated Within Firms So It Helps Firm To Transfer Material From Its One Firm To Another With Out Any Price Changes. It helps The Firm To Reduce Extra Cost To Transfer Material To Its Subsidiary Firms