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Assignment 3 Management Accounting Case West Island Products Essay

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Running Head: FINANCAL MANAGEMENT

Financial Management

Answer No. 2 First advantage of outsourcing is that the organization is in the position to ensure that it is able to complete its activities in a swift and expert manner. Second advantage of outsourcing is that it helps organization to concentrate on core process instead of supporting processes carried out by it. Third advantage of outsourcing is that the organization will be in the position to ensure that it is engaged in activities of risk sharing over a period of time (Carroll, 2007). First disadvantage of outsourcing is that the organization will have risk of exposing confidential data. Second disadvantage of outsourcing is that it can cause some problem to …show more content…

The Corporate Controller is likely to make recommendation to move forward with transferring goods between divisions and reducing the burden of work to be carried out by the organization.
Answer No. 3 For handling transfer disputes in future, first thing to be carried out by the organization is that it should keep its transfer policy clear over a period of time. In case of this transfer policy, organization will be in the position to ensure that each and every division has knowledge of the activities to be carried out by it over a period of time. The organization has to follow a financial policy for setting up transfer pricing range. The transfer pricing range should be set up in such a situation that the organization is not in the position to incur any kind of loss at a point of time in the future. First point for setting up transfer pricing range is the point of benefit for both the division. Here, the organization transferring products should ensure that it does follow the law regarding not selling produce below standard rates in the market (Brigham & Ehrhardt, 2007). Transfer price must be set at a rate than it is not resulting in higher expenditure for the organization over a period of time. For transfer pricing, it is an advantage as this method helps organization to work at a lower cost.

References
Brigham, E. & Ehrhardt, M. (2007). Financial Management: Theory & Practice. (12th ed.). Cengage

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