AMA Case 401

Questions 1 Using the data provided, explain Paul Giddings' misgivings about a transfer price of 12.50. Indicate the actions he may take to source his rubber hose requirements and identify those which are in BBR's best interests. 2 Analyse the transfer pricing procedure of BBR within the management-control system (Exhibit 401.2). Outline clearly all the hidden costs associated with the existing procedure. 3 Suggest and examine alternative transfer-pricing procedures and transfer prices which may lead to an improvement. Questions 1 Using the data provided, explain Paul Giddings' misgivings about a transfer price of 12.50. Indicate the actions he may take to source his rubber hose requirements and identify those which are in BBR's best interests. 2 Analyse the transfer pricing procedure of BBR within the management-control system (Exhibit 401.2). Outline clearly all the hidden costs associated with the existing procedure. 3 Suggest and examine alternative transfer-pricing procedures and transfer prices which may lead to an improvement