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Q. Show the Arguments against the controllability principle?
- Political arguments may occur over such costs which are more subjective than objective when determining controllability. It is not always black and white when determining controllability from uncontrollability.
- Just because a cost is uncontrollable does not mean a manager being assessed should ignore it altogether. As an example if managers recognise there is an interest charge by head office based upon the capital employed used within a division, then to hold them more accountable could help improve efficiency by the minimisation of capital employed. In the case of head office charges, lack of accountability could encourage over consumption of these resources provided centrally.
Q. Market based approaches? Cost based approaches to transfer pricing can ignore what external competition would charge, therefore 'open (external) market price' could be used
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Q. Common aims of transfer pricing systems? The common aims of transfer pricing systems Motivate mangers: A transfer price ensures an internal cost is recognised by
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A philosophy that believes traditional or conventional budgeting methods are of little use to management, however beyond budgeting does not believe that budgeting within organisati
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