Negotiated prices-transfer pricing methods, Managerial Accounting

Assignment Help:

Negotiated prices

Where market based prices are not applicable, it has been argued that allowing managers to bargain with each other in order to establish transfer prices develops the kind of management skills which are necessary to the future of the enterprise. Managers would need to have detailed knowledge of their own resources and costs and would need to apply their inter-personal skills of communication, persuasiveness and bargaining in order to show a profit.  Negotiated prices thus stress the human behavioral aspects of the organization. Social and political skill can be translated into good divisional performance, as measured by the accounting system.

Unfortunately, negotiated prices can also lead to conflict, especially where two managers cannot agree on a transfer price. In such circumstances, a mechanism for resolving the dispute is required at a central level. The intervention of central authority to resolve conflicts clearly results in a loss of autonomy with dysfunctional consequences. A system which aims to reveal the behavioral skills of managers can as easily reward those who can manipulate the inherent tensions between centre and divisions to their best advantage.


Related Discussions:- Negotiated prices-transfer pricing methods

Implied interest rate, Suppose the spot price of gold is $1700 per ounce. T...

Suppose the spot price of gold is $1700 per ounce. The futures price for delivery in six months is $1712, while the futures price for delivery in one year is $1720. The interest ra

Define the balanced score card, Define the Balanced Score Card? 1. Dist...

Define the Balanced Score Card? 1. Distinguish between standard control and budgetary costing. 2. Define the ‘Balanced Score Card? Explain the steps in implementing ‘Balance

Cost behavior, Echeverria SA is an Argentinian manufacturing company whose ...

Echeverria SA is an Argentinian manufacturing company whose total factory overhead costs fluctuate somewhat from year to year according to the number of machine-hours worked in its

Cvp, THE BREAK EVEN POINT

THE BREAK EVEN POINT

What is the main purpose of cost centre, Explain the main purpose of cost c...

Explain the main purpose of cost centre The main purpose of cost centre is two fields. 1. Recovery of cost: costs are collected, classified into two field in respect of

Receivables management, In the earlier unit, we have studied how firms dete...

In the earlier unit, we have studied how firms determine their requirements for current assets and manage their holdings in cash and marketable securities. Inside a classical manuf

Application of transportation model, Application of Transportation Model ...

Application of Transportation Model In the direct logic, the transportation model looks for the determination of a transportation plan of a particular commodity from a number o

Budgets and human behaviour, what are the most effective management styles ...

what are the most effective management styles in an organisation

What are non-financial factors, QUESTION:  PART A One of the divis...

QUESTION:  PART A One of the divisions within Acme Manufacturing company is presently negotiating with another supplier regarding outsourcing component A that it manufac

Strategy, Strategy A business characteristically invests considerable t...

Strategy A business characteristically invests considerable time and money in developing or creating its strategy. Employees, harried with day-to-day tasks, sometimes fail to s

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd