P1 Section CTransfer PricingGoods and services are oftentransferred internally from one division (selling division) to another (buying division).The transfer price can be the subject of considerablecontroversy.
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P1 Section CThe value of a transferred good is revenue to the selling division and cost to the buying division. This value is called transfer pricingTransfer Pricing
P1 Section CTransfer PricingTransfer 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