1. Review the meaning of the concepts or terms given in Key Terms and Concepts.
2. Why may transfer prices exist even in highly centralized organizations?
3. Why do some consider market-based transfer prices optimal under many circumstances?
4. What are the limitations to market price-based transfer prices?
5. What are the advantages of a centrally administered transfer price (that is, direct inter- vention)? What are the disadvantages of such a transfer price?
6. Why do companies often use prices other than market prices for interdivisional transfers?
7. What are the disadvantages of a negotiated transfer price system?