Which of the following is not true about international transfer price for a multinational firm?
A. Allows the firm to *uate each division
B. Allows firms to correctly price products in each country in which it operates
C. Provides each division with a profit-making orientation
D. Allows firms to attempt to minimize worldwide taxes
Answer (B) is correct .
The calculation of transfer prices in the international arena must be systematic. A scheme for calculating transfer prices for a firm may correctly price the firm’s product in Country A but not in Country B. The product may be overpriced in Country B, causing sales to be lower than anticipated; or, the product may be underpriced in Country B, and the authorities may allege that the firm is dumping its product there.