Section C-3 Performance measures(2).pdf - Transfer Pricing...

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P1 Section C Transfer Pricing Goods and services are often transferred internally from one division (selling division) to another (buying division). The transfer price can be the subject of considerable controversy.
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P1 Section C The value of a transferred good is revenue to the selling division and cost to the buying division. This value is called transfer pricing Transfer Pricing
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P1 Section C Transfer Pricing Transfer pricing : sets internal exchanged prices Departments operate as an independent entity Result in unit profits that are a reliable and accurate measure of unit performance Preserve and encourage unit autonomy Encourage goal-congruent behaviour
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