Sun Motors Inc. operates as a decentralized multidivisional car company. Its safety division buys most of its
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(a) Using the general approach to transfer pricing, determine the minimum transfer price for the airbag division.
(b) Sun Motors Inc.'s transfer price rules state that whenever divisions with unused capacity sell products internally, they must transfer the products at incremental costs. Discuss how this transfer-price policy will affect goal congruence, division performance, and autonomy.
(c) The safety and airbag divisions have negotiated a transfer price between $270 and $300 per airbag. Discuss the impact of this transfer price on each division in terms of goal congruence, division performance, and division autonomy.
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Related Book For
Managerial Accounting Tools for Business Decision Making
ISBN: 978-1118856994
4th Canadian edition
Authors: Jerry J. Weygandt, Paul D. Kimmel, Donald E. Kieso, Ibrahim M. Aly
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