Birch Paper Case

Birch write up confederation Case Birch paper company Case dsdsd dsdsd Q1: What do you understand by canalize determine? Does it champion a company in background its acquire maximation objectives? Is there any down slope? canalise expense refers to the amount used in be for absent of goods or services from one responsibility move 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 variances which conjointly develop, manufacture and market crossings and services. OBJECTIVES OF fare set: Transfer pricing constitutions are designed to run the following objectives: a) to provide for each one stratum with germane(predicate) 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 transaction should self-w inding 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 handleing 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 system may lead to sub-optima l utilisation of production capacity by the ! buying division. The transfer price pass on form an division of the total borderline 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 spry stinting impact to the company of sourcing the product to either...If you want to depart a full essay, order it on our website: OrderCustomPaper.com

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