Question: The principle reason for transfer pricing systems is to communicate data
The principle reason for transfer-pricing systems is to communicate data that will lead to goal- congruent decisions by managers of different business units. When managers take actions that conflict with organizational goals, dysfunctional behavior exists. Why does top management some-times accept a division manager’s judgments, even if the division manager appears to behave in a dysfunctional manner?
Answer to relevant QuestionsYou are given the following data:Sales ..... $227,500,000Invested capital . $ 65,000,000Net income ..... $ 9,100,000Compute the following:1. Turnover of capital2. Return on sales3. Return on investment (ROI)“To me, economic value is the only justifiable basis for measuring plant assets for purposes of evaluating performance. By economic value, I mean the present value of expected future services.Still, we do not even do this ...Does the IRR model make significantly different decisions than does the NPV model? Why or why not?When a company elects to invest in a project with a positive NPV, what will generally happen to the value of the company? What will happen to this value when the company invests in a negative NPV project?“When there are income taxes, depreciation is a cash outlay.” Do you agree? Explain.
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