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What constraints might affect the pricing strategy employed

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Reference no: EM132514575

Transferring Pricing

Klett Kompany, an Italian conglomerate, has a subsidiary in Sweden (a country with high corporate taxes) and a subsidiary in the Philippines (where corporate taxes are much lower.)

Question a. If Klett's Swedish subsidiary wishes to buy product from the Philippino subsidiary, should the parent company require the Philippino subsidiary to charge a high transfer price or a low transfer price?

Question b. Why?

Question c. What constraints might affect the pricing strategy employed?

Question d. Suggest three methods a company might use to establish transfer prices between operating divisions.

Question e. What goals should the company be trying to achieve by its transfer pricing policy?

Reference no: EM132514575

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