Question

A transferminuspricing method leads to goal congruence when​ ________. A. managers act in their own best interest and the decision is in the longminusterm best interest of the company B. there is a low degree of centralization C. managers do not act for their own best interest and work for the longminusterm best interest of the​ manager's subunit D. there is a price difference in different markets due to market inefficiencies

Answer 1

Answer:

The correct answer is the option A: managers act in their own best interest and the decision in in the long-term.

Explanation:

To begin with, a transfer-pricing is a method used in the companies in order to achieve a sale from a product between one subsidiary to another within a company and is commonly used in situations where the subsidiaries of a parent company are measured as separate profit centers. And regarding the price, the manager of the subsidiary treats it the same way as it would be a sale of a product outside of the company. That is why that this method leads to the goal when the managers act in their own best interest.