Performance measures and transfer pricing

Assignment Help Accounting Basics

Reference no: EM1358196

1. Mario and Lucy opened an ice cream shop in Kissimmee. Their goal is to maximize profit and to make the business appealing to customers. The cream shop was a big success, so they decide to open an ice cream shop in many cities including Orlando. They hire Luis to manage the shop in Orlando. Mario and Lucy are considering different sets of performance measures for Luis. The first set would grade Luis based on the cleanliness of the restaurant and customer service. The second set would use accounting numbers including the profit of the shop in Kissimmee.

Required:

a) Explain the advantages and disadvantages of each set of performance measures.

b) How do they must design the organizational architecture to control the agency problems?

2. When goods are transferred from one profit or investment center to another, an internal price is assigned to the units transferred. Although the general rule for transfer prices is the outlay cost plus opportunity cost, may companies instead use different methods to price their goods and services. What is the transfer price that maximizes the firm value? What are the main reasons for transfer price within firms? What are the advantages and disadvantages of the most common transfer pricing methods?

Reference no: EM1358196

Questions Cloud

Explain why do us taxpayers lose : the congressional research service estimates that at least $45 million of counterfeit u.s. $100 notes produced by the north Korean government are in circulation. Explain why do U.S. taxpayers lose because of north Korea's counterfeiting.

Impact of technology innovation on social change : Creative disruptions (disruptive technology and impact of technology innovation on social change

Determine the sustainable rate of growth : The Green Giant has a 5 percent profit margin and a 40% divided payout ratio. The total asset turnout is 1.40 and the equity multiplier is 1.50. Determine the Sustainable rate of growth?

What current is in the primary circuit : What current is in the primary circuit. A proton moves at a speed of 8.0 103 m/s as it passes through a magnetic field of 0.55 T. Find the radius of the circular path. Note down that the charge carried by the proton is equal to that of the electron..

Performance measures and transfer pricing : Explain the advantages and disadvantages of each set of performance measures. How do they must design the organizational architecture to control the agency problems?

Marriott international and its aspects of culture : Write a paper on the characteristics of the company that make it one of the 100 best companies to work for. Discuss what the company does, aspect of its culture, and why it is successful. Your paper should be 5 pages.

Please explain each effect of the three effects : Please explain each effect of the three effects also explain the downward slope of the aggregate demand-aggregate supply model: Real-balances effect, interest-rate effect, and foreign-purchases effect.

Write c program for linked list applications : Write a complete C program which illustrates the Linked list applications data structures and algorithms. The program will read in mid-semester test scores as Main Linked List and produce six outputs:

Critical reasoning-understanding & criticizing arguments : Legislation that can't be enforced leads to disrespect for the law, so legislation making marijuana possession a criminal offense leads to disrespect for the law.

User Account

All Pages