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Unformatted text preview: ACCY 302 (Chen) Class 19 Fall 2009 BIRCH PAPER COMPANY Overview Birch Paper is a classic case that provides an excellent opportunity to present, analyze, and evaluate transfer pricing issues. In only two pages, the case presents a common business situation involving the relationship between three divisions and suggests several typical transfer pricing solutions: (1) at variable cost; (2) at full cost; (3) at full cost plus profit; (4) at market price; and (5) at a negotiated price. This setting facilitates the discussion of the advantages and disadvantages of each of these solutions as well as topics of coordination among divisions and decision-making policies. It’s also an opportunity to consider whether variable costs or full costs are more appropriate for decision-making. Group homework assignment 1) Fill in the missing prices and costs on the “Diagram of the alternatives” and “Costs of the alternatives” which are attached. On the “Diagram of the alternatives”, fill in the amounts indicated in the nine dotted ovals. Some amounts may be easy to find in the case, some will need to be computed from case information, and some you will not...
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This note was uploaded on 11/08/2011 for the course ACCY 302 taught by Professor Staff during the Spring '08 term at University of Illinois, Urbana Champaign.
- Spring '08