Make or Buy
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Questions and Answers

Which of the following is a potential consequence of setting artificially low or high transfer prices?

  • Improved performance evaluation
  • Legal issues and fines (correct)
  • Enhanced internal relations
  • Increased profitability
  • What is one purpose of using transfer prices?

  • To improve cost efficiency
  • To optimize operations
  • To evaluate performance (correct)
  • To manage internal resources
  • Why is it important for companies to establish clear, fair policies for setting transfer prices?

  • To manage internal resources
  • To optimize operations
  • To avoid tax implications
  • To prevent tensions between divisions (correct)
  • Which of the following factors is a key consideration in make or buy decisions?

    <p>Cost</p> Signup and view all the answers

    What is the impact of make or buy decisions on an organization's operational efficiency?

    <p>Positive impact</p> Signup and view all the answers

    Why might a small tech start-up decide to outsource its customer service function?

    <p>To reduce long-term costs</p> Signup and view all the answers

    Which factor may make it more efficient for a company to outsource rather than produce in-house?

    <p>Limited resources</p> Signup and view all the answers

    What is the primary reason why companies prefer to control processes and tasks that align closely with their core competencies?

    <p>To focus on their main business</p> Signup and view all the answers

    Why might a company choose to keep the production of a patented drug in-house?

    <p>To protect intellectual property and maintain confidentiality</p> Signup and view all the answers

    What is the role of intra-company trading in large corporations with multiple business units?

    <p>To enhance efficiency and quality control</p> Signup and view all the answers

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