It combines responsibility centers, charts of accounts, control reports, and activity centers and cost-drivers from activity-based costing. This is inconsistent with the expectation that the division must meet the market price if they wanted the business. This idea is reinforced as control imposes goal-setting and strategic planning on a company.
Evidence of problem"Palix believed that two board alternative paths were conceivable: Clust could focus purely on group buying, or it could broaden the website's offerings, with less emphasis on getting consumers a low price.
Under such arrangement, Mr. Firstly, we look at the transfer price that Thompson quoted.
Market price should be used as it reflects how well is the division doing as compared to competitors. This model has delivered results in line with the expectations from the top management.
To overcome the above problems, the transfer pricing policy needs to be change and the following methods could be used: a Two-step pricing This method is to establish a transfer price that includes two charges: i First, for each unit sold, a charge is made that is equal to the standard variable cost of the production.
The Thompson and Southern divisions are not operating at their full capacity, their under utilization is of concern to the Vice President. It has four producing divisions and a timberland division — The Thompson division converts the paperboard output into corrugated box and prints and colors the outside surface of the box.
This bid will mean no business for the Thompson and Southern divisions, their condition will only get worse with it, their fixed costs will remain fixed and it will also hurt the interests of the company as a whole.