Question: Explain the effect of transfer pricing on performance measures [both divisional and company wide profits] What are the objectives of a transfer pricing system? Briefly

Explain the effect of transfer pricing on performance measures [both divisional and company wide profits] What are the objectives of a transfer pricing system? Briefly explain each. How does opportunity cost approach help in transfer pricing? Explain how 'market price' play an important role in opportunity cost approach. Explain how excess capacity affect the price and profit of a company. What are the benefits and draw backs of 'negotiated transfer prices

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