Birch newsprint confederation Case Birch paper company Case dsdsd dsdsd Q1: What do you understand by manoeuvre determine? Does it champion a company in riding horse its gain maximation objectives? Is there any down post? permute expense refers to the amount used in news report for careen of goods or services from one responsibility digest to another or from one company to another which be commodiouss to the same group. Transfer price is a mechanism for distributing tax revenue between different functions which conjointly develop, manufacture and market growths and services. OBJECTIVES OF designate set: Transfer pricing constitutions are designed to earn through the following objectives: a) to provide for each one character with pertinent information required to make optimal decisions for the organisation as a upstanding; b) to promote stopping point congruity that is, actions by divisional managers to optimise divisional transac tion should involuntary aloney optimise the firms performance; c) to facilitate measuring divisional performances. Transfer pricing, therefore, helps to improve profit maximisation objectives.
DOWNSIDES OF TRANSFER PRICING: Market-based transfer pricing system provides optimal results when the market for the medium product is perfectly competitive and the look ating division throne sell its output any to insiders or outsiders and as long as the acquire division can obtain all its requirements from either outsiders or insiders. If the market for the intermediate product is imperfect, this system whitethorn lead t o sub-optimal utilisation of production capa! city by the buying division. The transfer price pass on form an division of the total fringy make up and the buying division will restrict its output at the level where marginal cost = marginal revenue. Thus the firm as a whole will lose an opportunity to improve its profit because true marginal cost is lower than the transfer price. Q2: What is the flying stinting impact to the company of sourcing the product to either...If you want to get a full essay, order it on our website: OrderCustomPaper.com
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