Birch Paper Case

Birch report confederation Case Birch paper company Case dsdsd dsdsd Q1: What do you understand by conveyance determine? Does it champion a company in background knowledge its realise maximation objectives? Is there any down fount? move out expense refers to the amount used in accounting for maneuver of goods or services from one responsibility reduce to another or from one company to another which be commodiouss to the same group. Transfer price is a mechanism for distributing revenue between different fragments which conjointly develop, manufacture and market produces and services. OBJECTIVES OF counterchange set: Transfer pricing constitutions are designed to grasp the following objectives: a) to provide for each one fragment with pertinent information required to make optimal decisions for the organisation as a upstanding; b) to promote stopping point congruence that is, actions by divisional managers to optimise divisional tr ansaction should self-activating aloney optimise the firms performance; c) to facilitate measuring divisional performances. Transfer pricing, therefore, helps to improve profit maximisation objectives.

DOWNSIDES OF TRANSFER PRICING: Market-based transfer pricing system provides optimal results when the market for the medium product is perfectly competitive and the divvy uping division throne sell its output any to insiders or outsiders and as long as the purchasing division can obtain all its requirements from either outsiders or insiders. If the market for the intermediate product is imperfect, this s ystem may lead to sub-optimal utilisation o! f production capacity by the buying division. The transfer price pass on form an division of the total peripheral make up and the buying division will restrict its output at the level where marginal cost = marginal revenue. Thus the firm as a whole will lose an opportunity to improve its profit because true marginal cost is lower than the transfer price. Q2: What is the immediate stinting impact to the company of sourcing the product to either...If you want to give a full essay, order it on our website: OrderCustomPaper.com

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