Page 135 - MAC4861_2 Costing class slides part 2

TRANSFER PRICING

Goals Of A Transfer Pricing System

• To motivate the divisional managers to make

decisions to the advantage of the company or group

as a whole (goal congruence).

• To ensure that each division’s performance is fairly

evaluated.

• The system should be simple to operate and

administer.

• The divisional managers should still have the ability to

make autonomous decisions.

• If possible, healthy competition between divisions

should be encouraged by the transfer pricing system.

135