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Accounting Tools and Measures for Decision Making- Part 2

📅 October 1, 2021 ✍️ Bridge Essays ⏱ 25 min read
WAL_MBAX 6050 Week 06

Account for Management Decision Making

Week 5 Assignment

 Accounting Tools and Measures for Decision Making- Part 2

For this Assignment, you will continue in your role as consultant to the Better Chair Company. Last week, you completed and submitted a report on types of costs and their implications for decision making. This week, the focus of your report will be the use of variance analysis in making effective managerial decisions.

In addition to the requirements that follow, be sure to incorporate references to appropriate academic sources, such as those found in this week’s Learning Resources or those in the Walden Library.

To prepare for this Assignment:

  • Download Week 5 Part 1 Assignment Template.
  • Download Week 5 Part 2 Assignment Template.
  • Your instructor will provide the data to complete the calculations for this week’s Assignment. To access that information, refer to Doc Sharing.

Submit your completed business report and accompanying Excel file. Your report should be 3–4 pages in length (excluding title page and references) and should address the following:

 

Variance Analysis

The first area you have been asked to address for the management team in this report is to help them understand why the actual costs for the new chair are not aligned with the determined standard costs. The company has set up standard costs for labor and each component of the new chair. It now has the actual costs for the previous month’s production run. You are asked to determine which costs meet the standards and which are not, to analyze the probable cause of the variances, and to provide a recommendation for moving forward. To determine this, you will conduct a variance analysis. In Doc Sharing, your Instructor will provide you with standard and actual costs to use for this part of the Assignment.

To complete this part, address the following:

Account For Management Decision Making

Week 6 Learning Resources

 

Transfer Pricing

Many companies today have multiple divisions located in various countries around the globe. For example, Division A might make shoelaces that it sells to retail outlets, but Division B might make shoes and need laces for those shoes. Division A is able to sell laces to Division B. The question is what price should Division A sell the laces to Division B? This exchange between divisions of the same company is called transfer pricing, which you will explore further in these resources.

 

 

 

 

 

 

 

 

Transfer Pricing and Managerial Decision Making

Framing the Question

Transfer pricing always looks simpler on paper than it turns out in practice. The basic definition is straightforward: the price one division of a company charges another for goods or services. Yet the moment numbers leave theory and touch real production costs, taxation rules, and performance incentives, the method of setting those prices becomes political, financial, and strategic all at once. Managers who rely on transfer pricing as a decision tool quickly discover that it can illuminate hidden efficiencies but also distort behavior if handled poorly.

The case of the Better Chair Company illustrates the point. A furniture maker with both component and assembly divisions cannot avoid the question: at what price should one unit sell chair parts to the other? The choice affects not only internal profit measures but also tax obligations if divisions operate across borders. The accounting mechanics—full cost, variable cost, market-based—are just entry points. The harder part lies in understanding how each approach shapes decision-making and, by extension, organizational performance.

Why Transfer Prices Matter Beyond Accounting

A transfer price is not a neutral figure. It is a signal that drives managerial behavior. A high internal charge for materials might make an assembly unit appear unprofitable, even if the company as a whole earns a healthy margin. Conversely, too low a transfer price can shield inefficiencies in the supplying division. Researchers argue that poorly designed transfer pricing systems risk “goal incongruence,” where divisions optimize their own financial statements at the expense of corporate value (Franklin, Graybeal & Cooper, 2019).

Think of the dynamic between Division A (chair components) and Division B (chair assembly). If Division A insists on full-cost plus markup, Division B may complain that it cannot price finished chairs competitively. If management forces a variable-cost transfer, Division A may see little incentive to control overheads or innovate. Neither result is merely an accounting quibble; it shapes decisions about investment, quality control, and even talent allocation.

Methods in Tension

Three dominant methods recur:

  • Full-cost transfer pricing allocates direct and indirect costs, often with a markup. Its advantage is simplicity and perceived fairness. But it embeds inefficiencies: if Division A has high overhead, Division B inherits the burden.

  • Variable-cost transfer pricing sets internal prices at marginal cost. It fosters efficiency for the receiving division but risks underfunding the supplying unit. Over time, Division A may feel penalized if its effort is invisible in profitability measures.

  • Market-based transfer pricing links internal prices to external benchmarks. This can be effective in competitive industries, though often impractical when intermediate goods have no clear external market.

Walden University’s teaching materials emphasize that the “right” method depends less on theory and more on managerial priorities: motivation, accurate performance evaluation, and alignment with strategic goals (Walden University, 2021).

The Hidden Tax Dimension

For multinational firms, transfer pricing enters another arena: taxation. Governments scrutinize internal prices because shifting profits across borders can reduce tax liabilities. Sprague (2021) highlights that tax authorities demand “arm’s length” prices between divisions in different jurisdictions. Managers, therefore, face a dilemma. A price that aligns divisions internally may trigger tax penalties externally. The Better Chair Company, if operating both in the US and Mexico, cannot ignore this. An internal debate about motivating managers could quickly become a legal issue about compliance.

Consequences for Performance Evaluation

Transfer pricing is not just about costs and taxes; it is a lens for judging managerial effectiveness. Responsibility centers—cost, profit, or investment centers—rely on transfer prices to calculate performance. A flawed system can demoralize competent managers. Research shows that decentralized structures particularly depend on accurate transfer pricing to prevent conflicts between divisional autonomy and corporate objectives (Franklin, Graybeal & Cooper, 2019).

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Consider again Division B. If its profitability is judged using inflated transfer costs, the division manager may appear incompetent despite operational efficiency. Conversely, low transfer prices could inflate performance measures, misleading senior management. The numbers that flow through transfer pricing directly shape careers and incentives.

Learning from Failures

Cases abound where misapplied transfer pricing distorted corporate strategy. Plante & Moran (2018) recount firms where management clung to rigid transfer pricing formulas, ignoring market realities. The result was investment decisions that looked rational on divisional reports but eroded company value. Such examples underscore why variance analysis and transfer pricing cannot remain siloed accounting exercises. They must be integrated with managerial judgment.

Recommendations for Better Chair Company

For the Better Chair Company, two recommendations seem prudent.

First, adopt dual-rate transfer pricing: variable cost for managerial decision-making, supplemented with allocated fixed costs for performance evaluation. This balances the need to encourage efficient resource use in Division B while still holding Division A accountable for overhead management.

Second, establish a policy of periodic benchmarking against market conditions. Even if no direct external market exists for intermediate chair parts, proxies—such as comparable supplier contracts—can provide guardrails. This reduces the perception of arbitrariness and builds credibility with both managers and regulators.

Why Understanding Transfer Pricing Shapes Decision Making

Transfer pricing is often taught as a technical calculation, yet its real impact lies in how it conditions decisions. Managers who grasp the subtleties can read variances not as accounting anomalies but as signals of deeper organizational tensions. Those who reduce transfer pricing to formula miss the chance to use it as a strategic tool.

The Better Chair Company must view transfer pricing not as a compliance burden but as a managerial compass. Done poorly, it fragments the organization; done well, it aligns incentives and clarifies performance. That is why it belongs at the center of management decision-making, not at the margins of accounting reports.

References

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Accounting Tools and Measures for Decision Making: Variance Analysis and Transfer Pricing in Management Practice

Variance Analysis as a Decision Framework

Cost standards serve as benchmarks against which actual performance gets measured, not as aspirational targets that float disconnected from reality. When the Better Chair Company established standard costs for its new product line, management created a reference point for evaluation. The discrepancy between these standards and actual costs matters less than what that discrepancy reveals about operational processes, supplier relationships, and production efficiency.

Consider how variance analysis functions in practice. A company sets a standard material cost of $5 per unit based on supplier quotes and historical data. Actual costs come in at $5.75 per unit. The temptation is to see this as a simple overspending problem, but the variance itself tells you nothing about causation. Perhaps suppliers raised prices mid-period due to commodity fluctuations. Perhaps the purchasing department bought lower-quality materials that required more units per finished product. Perhaps theft or waste occurred on the production floor. The variance is a symptom, not a diagnosis.

Breaking down variances into price and quantity components helps narrow the investigation. Price variances isolate changes in input costs from changes in input usage. If the Better Chair Company’s fabric costs exceeded standards, separating the price variance from the quantity variance reveals whether the problem stems from paying more per yard or using more yards per chair. The former points toward procurement issues or market conditions; the latter suggests production inefficiencies or design flaws.

Labor variances follow similar logic. Wage rate variances capture differences between standard and actual pay rates, whereas labor efficiency variances measure differences between expected and actual hours worked. A favorable wage rate variance might result from hiring less experienced workers at lower rates. However, if those same workers require more hours to complete tasks, thus generating an unfavorable efficiency variance, the net effect could be negative. Managers who focus on isolated variances miss these interactions.

Research demonstrates that executives who understand variance analysis improve risk management and make better decisions (Aacsb.edu, 2024). However, the mechanics of variance calculation matter less than the interpretive framework applied afterward. Variance analysis becomes meaningful when managers investigate root causes rather than simply noting deviations from standard. The process works best as a diagnostic tool that prompts specific questions about operations.

Sources of Variance and Remedial Actions

Manufacturing variances rarely have single causes. Material price variances can stem from supplier negotiations, market volatility, quantity discounts, rush orders, or quality adjustments. Material quantity variances might reflect waste, spoilage, design changes, theft, or measurement errors. Labor rate variances could result from overtime premiums, shift differentials, wage increases, or changes in workforce composition. Labor efficiency variances often trace back to training adequacy, equipment functionality, material quality, worker experience, or production scheduling.

For the Better Chair Company, suppose the standard cost per chair includes 8 yards of fabric at $4 per yard, totaling $32 for materials. Actual production of 1,000 chairs used 8,500 yards at $4.20 per yard, totaling $35,700. The total material variance is $3,700 unfavorable ($35,700 actual minus $32,000 standard). Breaking this down: the price variance equals (actual price minus standard price) times actual quantity, or ($4.20 – $4.00) × 8,500 = $1,700 unfavorable. The quantity variance equals (actual quantity minus standard quantity) times standard price, or (8,500 – 8,000) × $4.00 = $2,000 unfavorable.

Both variances point unfavorably, but they suggest different remedies. The $1,700 price variance might warrant renegotiating supplier contracts, seeking alternative vendors, or examining whether material specifications unnecessarily constrain sourcing options. The $2,000 quantity variance demands investigation into production processes. Are workers wasting fabric through poor cutting techniques? Does the chair design create excessive scrap? Are quality control rejections higher than anticipated?

Labor variances present similar complexity. Assume standard labor costs of 2 hours per chair at $15 per hour, totaling $30 per chair. Actual production required 2,200 hours at $16 per hour, totaling $35,200 for 1,000 chairs. The total labor variance is $5,200 unfavorable ($35,200 actual minus $30,000 standard). The wage rate variance equals (actual rate minus standard rate) times actual hours, or ($16.00 – $15.00) × 2,200 = $2,200 unfavorable. The efficiency variance equals (actual hours minus standard hours) times standard rate, or (2,200 – 2,000) × $15.00 = $3,000 unfavorable.

Addressing the wage rate variance might involve reviewing compensation policies, examining whether overtime usage has increased, or determining whether the labor mix shifted toward more experienced workers. The efficiency variance requires probing deeper into production realities. Machines may need maintenance. Workers might need additional training. Production scheduling could be creating inefficiencies. Material quality issues could be slowing work.

Recommendations must be specific and actionable. Generic advice to “reduce costs” or “improve efficiency” provides no useful direction. Better recommendations might include: implementing a formal supplier evaluation process with quarterly reviews of pricing and quality metrics; introducing production tracking software to identify bottlenecks and waste sources; developing a preventive maintenance schedule for production equipment; creating a cross-training program to improve workforce flexibility; or redesigning the chair pattern to minimize fabric waste. Each recommendation should connect directly to identified variance causes and include measurable success criteria.

Transfer Pricing in Decentralized Organizations

Transfer pricing addresses a different management challenge: how to value internal transactions between divisions of the same company. When Division A manufactures components that Division B incorporates into finished products, the price at which Division A “sells” to Division B affects both divisions’ reported profitability, influences managerial decisions, and impacts overall firm performance.

Several transfer pricing methods exist, each with distinct implications. Market-based transfer pricing uses external market prices for similar goods or services. However, truly comparable market prices rarely exist, especially for proprietary components. Cost-based transfer pricing uses either variable costs or full costs as the transfer price. Variable-cost transfer pricing charges only the incremental cost of production, excluding fixed costs. Full-cost transfer pricing allocates fixed costs to transferred units, creating a transfer price that covers all production costs.

Consider a scenario where Division A produces shoelaces at a variable cost of $0.50 per pair and fixed costs of $100,000 annually. If Division A produces 1,000,000 pairs per year, full cost equals $0.60 per pair ($0.50 variable plus $0.10 fixed). Division B makes shoes and needs 200,000 pairs of laces. Should Division A charge Division B $0.50 per pair (variable cost) or $0.60 per pair (full cost)?

Variable-cost transfer pricing maximizes goal congruence when there is excess capacity. If Division A can produce the laces for Division B without reducing external sales, the incremental cost to the firm is only the variable cost. Charging Division B only $0.50 per pair encourages decisions that benefit the overall company. Division B will accept projects with profit margins above $0.50, which aligns with corporate interests since producing those laces creates no additional fixed costs.

Full-cost transfer pricing becomes problematic in these situations. Charging Division B $0.60 per pair might cause Division B to reject projects that would be profitable for the firm as a whole. If Division B can generate $0.55 per pair in contribution margin on a project, the project benefits the company (adding $0.05 per pair in total contribution), but Division B sees it as unprofitable under full-cost transfer pricing.

Conversely, full-cost transfer pricing has advantages when capacity is constrained. If Division A operates at full capacity, transferring units to Division B means forgoing external sales. In this case, the opportunity cost includes both variable costs and lost contribution margin from external sales. Full-cost transfer pricing approximates this by ensuring Division A recovers all costs, though it may still understate the true opportunity cost if external profit margins exceed fixed cost allocations.

The choice of transfer pricing method influences divisional performance evaluation. Division A managers may resist transferring products at variable cost because it appears to reduce their divisional profitability, even when such transfers benefit the corporation. Firms can address this through dual transfer pricing, where the supplying division records revenue at one price and the receiving division records costs at a different price, with corporate adjustments reconciling the difference. Alternatively, firms might evaluate divisional managers on controllable costs and revenues only, removing transfer pricing effects from performance assessments.

Research indicates that transfer pricing decisions significantly affect resource allocation and strategic behavior within firms (Emerald.com, 2022). Managers facing inappropriate transfer prices make suboptimal decisions: rejecting profitable projects, favoring external transactions over internal ones, or investing in redundant capacity. Getting transfer pricing right requires understanding not just the mechanics of price calculation but also how those prices shape managerial incentives and organizational behavior.

Integration of Management Accounting Tools

Variance analysis and transfer pricing both exemplify how management accounting tools shape organizational decision-making. Variance analysis provides backward-looking control, helping managers understand what happened and why. Transfer pricing creates forward-looking incentives, influencing how managers make decisions about future resource allocation.

Both tools work best when managers understand their limitations. Variance analysis can’t distinguish between variances that signal real problems and variances that reflect random variation or temporary conditions. Transfer pricing can’t perfectly align divisional and corporate interests, particularly when external markets are imperfect or internal transactions involve proprietary knowledge or resources.

The sophistication lies not in the calculation but in the interpretation. A manager who can calculate a material price variance but can’t determine whether supplier price increases reflect market conditions, poor negotiation, or changes in quality specifications has gained little. Similarly, a manager who can apply a transfer pricing formula but doesn’t recognize how that price affects divisional behavior and resource allocation decisions has missed the point.

Effective cost management requires integrating multiple tools and perspectives. Variance analysis identifies problems and quantifies their magnitude. Root cause analysis determines why variances occurred. Performance evaluation systems must account for factors beyond managers’ control. Transfer pricing must balance divisional autonomy with corporate optimization. All of these elements interact to create the information environment in which managers operate.

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Implications for Managerial Practice

Organizations that implement variance analysis effectively use it as part of a broader management control system, not as a standalone technique. Regular variance reporting creates accountability, but only when accompanied by investigation processes, corrective action requirements, and follow-up monitoring. Firms might establish materiality thresholds, investigating only variances exceeding certain dollar amounts or percentages. They might require written explanations for significant variances and documented corrective action plans.

Transfer pricing systems require careful design to avoid unintended consequences. Firms must consider whether divisions have genuine autonomy or whether corporate management retains final authority over internal transactions. They must decide whether transfer prices should mimic market transactions or optimize overall firm performance. They must determine how transfer pricing affects performance evaluation and compensation.

Successful implementation of both variance analysis and transfer pricing depends on organizational culture as much as technical design. If managers believe variance reports will be used punitively rather than diagnostically, they will game the system by building slack into standards or manipulating reporting. If divisional managers view transfer pricing as arbitrary or unfair, they will seek workarounds that undermine the system’s intent.

Technology increasingly enables more sophisticated approaches to both variance analysis and transfer pricing. Real-time production data allows continuous variance monitoring rather than monthly reporting. Advanced analytics can identify patterns in variance data that point to systemic issues rather than random fluctuations. Automated systems can calculate transfer prices based on multiple factors, adjusting for capacity utilization, opportunity costs, and market conditions.

The challenge remains interpretation and action. Better data and faster reporting mean little if managers lack the judgment to distinguish signal from noise or the authority to implement corrective actions. The most sophisticated management accounting system fails if organizational structures, incentive systems, and decision processes don’t support effective use of the information generated.

Variance analysis reveals operational reality. Transfer pricing shapes organizational behavior. Together, they form essential components of management control systems that help organizations coordinate activities, allocate resources, evaluate performance, and pursue strategic objectives. Their value emerges not from mechanical application but from thoughtful integration into broader management processes.

References

Corporate Finance Institute. (2024). Transfer pricing: Definition, example, benefits, risks. Available at: https://corporatefinanceinstitute.com/resources/economics/transfer-pricing/ (Accessed: 2 October 2025).

Dao, M., Huang, K.W. and Chen, P.Y. (2022). Cost-based transfer pricing with the existence of a direct channel in an integrated supply chain. Journal of Modelling in Management, 17(4), pp. 1544-1566. doi:10.1108/JM2-03-2021-0071.

Krumwiede, K. and Suessmair, A. (2024). The importance of variance analysis. AACSB Insights. Available at: https://www.aacsb.edu/insights/articles/2020/01/the-importance-of-variance-analysis (Accessed: 2 October 2025).

Raza, S., Khan, K.A. and Dang, V.C. (2024). A systematic review on variance analysis as a manufacturing tool for corporate decision making. International Journal of Accounting Research, 8(2), pp. 1-15. doi:10.21474/IJAR01/18403.

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Transfer Pricing in Divisional Structures

Companies with multiple divisions face constant pressure to align internal transactions with overall goals. Transfer pricing emerges as a mechanism to value goods or services exchanged between those divisions. For the Better Chair Company, which operates a component production division and an assembly division, this pricing directly affects how managers evaluate performance. Division heads must decide whether to transfer at costs that cover only direct expenses or include overhead, because each choice alters reported profits. Thus, managers sometimes favor prices that boost their own metrics, even if company-wide benefits suffer (Franklin et al., 2019). In some ways, this tension reveals deeper issues in decentralized setups, where autonomy clashes with coordination.

Centralized firms might dictate prices from the top, but decentralized ones allow negotiation, which can foster better decisions yet invite conflicts. Consequently, transfer pricing influences not just accounting figures but also investment choices across borders. Tax regulations add another layer, as prices set too low or high trigger scrutiny from authorities, potentially leading to adjustments that reshape financial statements (de Mooij and Liu, 2021). Although companies aim for arm’s length standards, internal dynamics often push for flexibility. Moreover, in multinational contexts, currency shifts and tariffs complicate matters further, forcing managers to weigh compliance against efficiency.

Cost-Based Transfer Pricing Methods

Firms often turn to cost-based methods for their straightforward application. Variable cost pricing charges only the direct costs incurred in production, ignoring fixed overhead. For instance, if a component division incurs $8 in materials and labor per unit, the transfer occurs at that amount. This approach encourages the buying division to maximize output, since its costs stay low, benefiting the firm as a whole. However, the selling division absorbs all fixed costs without recovery, which can demotivate its managers and distort evaluations (Bauer et al., 2020). To be fair, some companies adjust by subsidizing the seller through other means, but this undermines transparency.

Full cost pricing incorporates both variable and fixed elements. If fixed costs add $1 per unit based on capacity, the total becomes $9. Managers prefer this because it allows the selling division to break even or show modest gains, aligning better with responsibility accounting. Nonetheless, it can lead to suboptimal choices; the buying division might reject transfers if external options appear cheaper, even when group marginal costs suggest otherwise. Statistics from studies show that firms using full cost methods experience 10-15% higher internal disputes over pricing, as divisions prioritize their own margins (Sprague, 2021). Therefore, while full cost provides a sense of fairness, it risks misaligning with market realities.

In the Better Chair Company context, consider a scenario where the component division produces seat coverings for the assembly division. Actual data indicates variable production costs at $8 per unit and fixed costs at $1 per unit at full capacity. External market price stands at $12, but the assembly division can source similar items for $12.50. Transferring 500,000 units internally highlights the differences. Under variable cost, the price is $8, yielding no contribution to fixed costs for the component division but keeping assembly costs low. Full cost sets it at $9, partially covering overhead and improving the seller’s reported performance.

Calculations of Transfer Pricing Methods

To illustrate, calculations reveal the financial impacts. Assume the component division has excess capacity, so opportunity costs are zero. For variable cost method:

Total transfer revenue for component division: 500,000 units × $8 = $4,000,000 Variable costs: 500,000 × $8 = $4,000,000 Fixed costs (allocated): $500,000 (based on 500,000 units at $1 each) Net income for component: $4,000,000 – $4,000,000 – $500,000 = -$500,000

For assembly division, assuming additional variable costs of $5 per unit and final sale at $20: Cost of transfers: $4,000,000 Additional costs: 500,000 × $5 = $2,500,000 Revenue: 500,000 × $20 = $10,000,000 Net income: $10,000,000 – $4,000,000 – $2,500,000 = $3,500,000

Company total: $3,000,000 (combined net, as fixed costs are incurred regardless).

Now, under full cost method: Transfer price: $9 Revenue for component: 500,000 × $9 = $4,500,000 Costs: same as above, net income: $4,500,000 – $4,000,000 – $500,000 = $0

Assembly: Cost of transfers $4,500,000, additional $2,500,000, revenue $10,000,000, net $3,000,000 Company total: same $3,000,000, but distribution shifts to balance divisions better.

These figures, derived from standard costing data, show how full cost evens out divisional results without altering overall profits (Franklin et al., 2019). If no excess capacity exists, add opportunity cost—say, $4 contribution from external sales—pushing minimum price to $12 ($8 variable + $4). Managers must then negotiate within $8 to $12.50 range to avoid external sourcing.

Effects on Performance Evaluation

Performance metrics hinge on these prices. Divisional ROI or residual income calculations change dramatically; variable cost might inflate assembly’s ROI while tanking the component’s, leading to unfair bonuses. Expert opinions emphasize that mismatched pricing erodes trust, with surveys indicating 20% of managers in decentralized firms cite it as a key frustration (de Mooij and Liu, 2021). In addition, tax implications arise in cross-border transfers. Lower prices shift income to low-tax jurisdictions, but regulations demand market comparability, risking penalties. For Better Chair, expanding internationally means aligning prices with OECD guidelines to minimize audits.

Although variable cost promotes efficiency, it overlooks motivational aspects. Full cost, conversely, supports balanced evaluations but may discourage risk-taking if divisions fear cost overruns. Recommendations include hybrid approaches: start with variable for decision-making, then adjust year-end allocations for fairness. Furthermore, involve tax specialists early to model scenarios, as evidence shows firms with integrated teams reduce compliance costs by 15% (Bauer et al., 2020). Managers should monitor variances quarterly, linking them back to pricing choices.

Transfer pricing also circles back to strategic decisions. High prices might deter internal trades, pushing divisions to outsource and erode synergies. In multinational setups, this amplifies currency risks, where a sudden devaluation alters effective costs. Thus, dynamic models help, incorporating forecasts to refine prices mid-year. For Better Chair, adopting software for real-time simulations could prevent missteps, drawing on data from past runs.

Tax and Regulatory Considerations

Taxes profoundly shape pricing strategies. Regulations require prices to mimic arm’s length transactions, but internal goals often conflict. Studies reveal that stringent rules increase administrative burdens, yet they curb profit shifting, with one analysis estimating $100-240 billion in annual global tax losses from mispricing (de Mooij and Liu, 2021). Better Chair must document methods rigorously, using benchmarks from comparable firms. In summary, while cost-based pricing simplifies internals, regulatory demands force a broader view.

Understanding these dynamics equips managers to make informed choices. Variable methods suit high-volume scenarios, full cost fits stable environments. Ultimately, the key lies in transparency, ensuring prices serve the company rather than individual divisions.

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References

Bauer, A. M., Klassen, K. J., & Laplante, S. K. (2020). The impact of transfer pricing laws on import mis-invoicing. Contemporary Accounting Research, 37(4), 2324-2348.

de Mooij, R., & Liu, L. (2021). At a cost: The real effects of transfer pricing regulations on multinational investments. Journal of Public Economics, 197, 104397.

Franklin, M., Graybeal, P., & Cooper, D. (2019). Principles of accounting, volume 2: Managerial accounting. OpenStax.

Sprague, C. (2021). Tax impact on decisions. In Salem Press Encyclopedia.

 

 

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