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ANSWER THE FOLLOWING QUESTIONS State four objectives of a transfer pricing system. (6mks) (b) Transfer pricing of products between process in a manufacturing company can be done at

ANSWER THE FOLLOWING QUESTIONS: (a) State four objectives of a transfer pricing system. (6mks) (b) Transfer pricing of products between process in a manufacturing company can be done at: 1. Cost 2. Sales value at the point of transfer. Required: Discuss how each of the above methods could be used effectively in the operations of a responsibility accounting system.(6MKS) C. shadow prices may be used in the setting of transfer prices between divisions in a company, where the intermediate products being transferred are in short supply. Required: Explain why the transfer prices thus calculated are more likely to be favored by the management of the divisions supplying the intermediate products rather than the management of the divisions receiving the intermediate products.(8mks)

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ANSWER THE FOLLOWING QUESTIONS: State four objectives of a transfer pricing system. (6mks) Transfer pricing of products between process in a manufacturing company can be done at: Cost Sales value at the point of transfer. Required: Discuss how each of the above methods could be used effectively in the operations of a responsibility accounting system.(6MKS) C. shadow prices may be used in the setting of transfer prices between divisions in a company, where the intermediate products being transferred are in short supply. Required: Explain why the transfer prices thus calculated are more likely to be favored by the management of the divisions supplying the intermediate products rather than the management of the divisions receiving the intermediate products.(8mks)

Jun 23 2020 View more View Less

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