Purchase Solution

Transfer Pricing

Not what you're looking for?

Ask Custom Question

I am a little confused with the transfer pricing in this case study. How do you find what the right transfer price is?

Questions:
Should the transfer be made?
Assume the transfer should be made. At what transfer price?

(See attached file for full problem description)

Attachments
Purchase this Solution
Solution Summary

This discuss the concept of transfer Pricing

Solution Preview

LYNCHBURG FOUNDRY REVISITED

The issue to be discussed is the transfer pricing. The transfer pricing is not only an accounting tool, rather it is a behavioral tool that motivate managers to make the right decisions, In particular the transfer price should be designed so that it accomplishes the following subjects:
1. It should provide each segment with the relevant information required determining the optimum trade off between company costs and revenues.
2. It should induce goal congruent decisions
3. It should help measure the economic performance of the individual profit centers, here namely Castings and pipe.
4. The system should be simple to understand and easy to administer.

Should the transfer be made?
Now the decision ...

Purchase this Solution
Free BrainMass Quizzes
Marketing Management Philosophies Quiz

A test on how well a student understands the basic assumptions of marketers on buyers that will form a basis of their marketing strategies.

Motivation

This tests some key elements of major motivation theories.

Change and Resistance within Organizations

This quiz intended to help students understand change and resistance in organizations

Lean your Process

This quiz will help you understand the basic concepts of Lean.

Understanding Management

This quiz will help you understand the dimensions of employee diversity as well as how to manage a culturally diverse workforce.

View More Free Quizzes
Related BrainMass Solutions

  • Transfer Prices and GAAP

    The main rule is that transfer pricing needs to be reasonable - which keeps the practice of using transfer pricing legitimate for internal business use.

  • Transfer Pricing Issues and Measures

    574996 Transfer Pricing Issues and Measures Transfer Pricing 1) What is your opinion on the questions below? Transfer pricing is an important topic from multiple perspectives.

  • Transfer Pricing as a Substitute for a Market Price

    //Transfer pricing has gained greater importance these days.

  • transfer pricing policy

    Cost-based transfer pricing methods require time and effort because external bids must be acquired and evaluated. True False 4. Transfer pricing issues typically occur in decentralized organization.

  • Transfer Pricing Computation

    518895 Formulae and explanations for Transfer Pricing. This solution presents the implications of Transfer Pricing and clarifies and explains the relationship with inter company transfer. The study identifies contribution to overhead.

  • Transfer Pricing Rule.

    448324 Transfer Pricing Rule. Should setting a transfer pricing rule should differ between national and multinational companies? What would be the pros and cons?

  • Transfer Pricing by Multinational Companies (MNC)

    How Multinational Companies use transfer pricing: Transfer pricing is implies the pricing charged on a subsidiary of a company by another subsidiary for goods and services.

  • Effects of the Various Transfer-Pricing Methods

    260080 Effects of the Various Transfer-Pricing Methods What effects do the various transfer-pricing methods have on results and manager behavior and what would the differences (if any) be in a multinational organization?

  • Opportunity cost, transfer prices and methods, balanced scor

    Transfer pricing refers to the pricing of contributions (assets, services and funds) transferred within an organization. 5) Ans False.

  • Transfer pricing issues and measures for performance evaluations

    590800 Transfer pricing issues and measures for performance evaluations Explain how important transfer pricing issues are for measuring performance and in the business world. Give an example to illustrate the issues.

View More Related Solutions