Explore BrainMass

Explore BrainMass

    Importance of Transfer Pricing and Performance Measures.

    This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

    Comment on the importance of transfer pricing and performance measures.

    How do they relate? And why are they important in the business environment?

    Some helpful websites:

    © BrainMass Inc. brainmass.com October 10, 2019, 5:33 am ad1c9bdddf

    Solution Preview

    This is a hot topic for individual profit centers and investment centers within a firm but often has no impact on the consolidated performance of the total firm. This is because transfer prices are the prices that units within a firm set to sell to each other. So, the sales price in one division is the same as the cost to another division. Any profit made in Step 1 because higher cost in Step 2 and so the ...

    Solution Summary

    Your tutorial is 256 words and explains why transfer prices make performance evaluation difficult. An example is given.