Answered: Explain the objectives of transfer…

Explain the objectives of transfer pricing and describe the advantages anddisadvantages of various transfer pricing alternatives.

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter9: Responsibility Accounting And Decentralization

Section: Chapter Questions

Problem 23Q: Discuss the advantages and disadvantages of a market-based transfer pricing approach.

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Discuss the advantages and disadvantages of a market-based transfer pricing approach.
Discuss the concept of transfer pricing.
A transfer pricing structure that considers the opportunity costs of selling to internal rather than external customers uses_______. A. the cost approach B. the general transfer pricing approach C. the market-based approach D. the opportunity cost approach
A transfer pricing arrangement that uses the price that would be charged to an external customer is a______. A. market-based approach B. negotiated approach C. cost approach D. decentralized approach
What is Transfer Pricing? What are the approaches in determining transfer prices? In your own idea, identify some best practices in transfer pricing.
Explain and critically assess the general idea behind transfer pricing. Would it be beneficial for allcompanies? Why?
Outline the rules for identifying the optimal transfer price.