Fabri Division is part of the Multo Group. Fabri Division produces a single product for which it
Question:
(a) Discuss the transfer pricing method by which Fabri Division should offer to transfer its product to Gini Division in order that group profit maximization is likely to follow. You may illustrate your answer with figures of your choice.
(b) Explain ways in which (i) the degree of divisional autonomy allowed and (ii) the divisional performance measure in use by Multo Group may affect the transfer pricing policy of Fabri
Division.
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