Question: Briefly explain why changing a transfer price will have no direct effect on a company's reported prot. {20 words maximum} Assume that a company sets

Briefly explain why changing a transfer price will have no direct effect on a company's reported prot. {20 words maximum} Assume that a company sets the transfer price for a product made by division A and sent to division B as full cost + 10%. Further assume that division A is treated as a prot center. Discuss the incentives this situation creates for the manager of division A and vehy it is not in the company's best interest. (30 words maximum}

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Briefly explain why changing a transfer price will have no direct effect on a company's reported profit. (20 words maximum)

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