chapter 8 quesion 11 - internal depreciation . Why is...

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What is transfer pricing ? Transfer pricing is the rates or prices that are utilized when selling goods or services between company divisions and departments, or between a parent company and a subsidiary. The transfer pricing that is set for the exchange may be the original purchase price of the goods in question, or a rate that is reduced due to
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Unformatted text preview: internal depreciation . Why is determining a fair transfer price important for division managers? Because the price would affect the profitability of each division, e.g., division b manager doesnt want to be overcharged for product or services, which would affect his/her, profitability and performance being reported to senior management....
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