Transfer_price_StudentQuestions_Wk8_2011(1)

Transfer_price_Stude - THE UNIVERSITY OF NEW SOUTH WALES SCHOOL OF ACCOUNTING ACCT2522 Management Accounting 1 Session 1 2011 Tutorial Week 8

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1 THE UNIVERSITY OF NEW SOUTH WALES SCHOOL OF ACCOUNTING ACCT2522 Management Accounting 1 Session 1, 2011 Tutorial Week 8 - Transfer pricing Tutorial Questions Overall Theme In previous weeks we have focused our attention on the use of management accounting information for costing purposes (e.g. ABC), processes improvement (e.g. ABM, process analysis), and for budget control (standard cost analysis). This week we switch our attention to another aspect of management accounting by exploring the concept of responsibility accounting. We look at how management accounting system can be designed to encourage desirable (goal-congruent) managerial behaviour and to reflect the autonomous nature of contemporary, de-centralised organisations. In particular, we examine two control mechanisms used in conjunction with the responsibility accounting system, namely, transfer pricing. We will consider how managers determine transfer prices, rationales behind these systems, their benefits and limitations. Along the way we will also consider the impact of interdependencies and why variability can play havoc on management accounting systems. Desired Learning Outcomes and Essential Reading Mowen et. al. (2010): Chapter 10: p368-374 Chapter 13: p508-513; p523-535 . TOPIC 6 T RANSFER PRICING After completing this topic, you should be able to: Explain the benefits and costs of decentralisation Explain the benefits of transfer pricing systems Understand the differences between the types of responsibility accounting systems Determine transfer prices using various methods, including: o Market price o Opportunity cost approach o Cost-plus price o Negotiated transfer price Understand the profitability implications of different transfer prices on divisional profits and the corporation’s profit as a whole.
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2 Self Study Questions (complete in your own time) Mowen et. al. 2010: Exercise 13.13
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This note was uploaded on 07/13/2011 for the course ACCT 2522 at University of New South Wales.

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Transfer_price_Stude - THE UNIVERSITY OF NEW SOUTH WALES SCHOOL OF ACCOUNTING ACCT2522 Management Accounting 1 Session 1 2011 Tutorial Week 8

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