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Transfer pricing issues and measures for performance evaluations

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Explain how important transfer pricing issues are for measuring performance and in the business world. Give an example to illustrate the issues.

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Transfer pricing impacts the prices of items "sold" between units within the same organization. The price of these items sets the "selling price" and the "costs" for the buying and selling units, impacting their unit's profits. So, if the sales price is higher (market price for instance), the performance of the seller looks good and the buyer looks worse (does not get a better than market ...

Solution Summary

Your discussion is 215 words plus an example of transfers at market or cost.