COST ACCOUNTING
TRANSFER PRICING
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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reinforce this company goal.
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be scrapped because an unwise goal will harm the company and should not be reinforced with a systematic approach.
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not be changed from the previous wise goals to incorporate the current unwise goal.
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not tie the managers’ reward to the pursuit of an unwise goal
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Detailed explanation-1: -14) The formal management control system includes shared values, loyalties, and mutual commitments among members of the company, company culture, and norms about acceptable behavior for managers and other employees.
Detailed explanation-2: -Companies use transfer pricing to reduce the overall tax burden of the parent company. Companies charge a higher price to divisions in high-tax countries (reducing profit) while charging a lower price (increasing profits) for divisions in low-tax countries.
Detailed explanation-3: -The choice of a transfer-pricing method has minimal effect on the allocation of company-wide operating income among divisions. No matter how low the transfer price, the manager of the selling division should sell the division’s product to other company divisions in the interests of overall company profitability.
Detailed explanation-4: -What is the relationship among motivation, goal congruence, and effort? Motivation combines goal congruence and effort. Motivation is the desire to attain a selected goal specified by top management (the goal-congruence aspect) combined with the resulting pursuit of that goal (the effort aspect).