27. A transfer price is the price charged for a component by the selling division to the buying division of the same company.
28. The price charged for the transferred good affects the costs of the buying division and the revenues of the selling division.
29. Transfer pricing is a complex issue.
30. When the selling division can sell and the buying division can buy externally at the market price, the company as a whole will be in the same position whether or not a market price transfer takes place internally. True False
31. Several transfer pricing policies are used in practice. These transfer pricing policies include market price, cost-based transfer prices, and negotiated transfer prices.
32. The selling division is forced to transfer a product internally when a cost-based transfer pricing policy is set by top management.
33. When a product is transferred at market price, the transfer will optimize both divisional and company-wide profits.