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Über dieses Buch

Transfer prices are of dominant importance in company practice and a decentralised organisation, e.g. a profit centre-organisation, is most-widely used. This textbook takes an innovative controversial approach by looking at functions of transfer prices and how different types of transfer prices can fulfil them. Suggestions common in other textbooks will be picked up and it will be shown why they do not contribute to solve the problems companies face. With support of numerous examples and exercises a conceptual understanding of this most relevant management topic will be developed. Transfer prices are an issue in most advanced courses on Management Accounting and/or Management Control and their analysis receives increasing attention. They are covered in one chapter in almost all management accounting textbooks. This often leads to serious oversimplifications and reductions of contents. This books aims at filling this gap and to provide a concise and controversial view on the topic.

Inhaltsverzeichnis

Frontmatter

Chapter 1. Cost and Management Accounting

Abstract
The accounting system deals with the conceptualisation and conditions of the company’s information systems. The management accounting system supports the planning and coordination of company decisions and has two main functions: Decision-making (decision support) and behavioural control (decision influencing).
Peter Schuster

Chapter 2. Functions and Types of Transfer Prices

Abstract
Transfer prices as the internal price of products created within the company have two main functions: profit allocation (in order to assess divisional profits and for performance measurement) and coordination (to come to decisions that are in the best interest of the company as a whole). Various types of transfer prices exist and are examined in view of these functions in the following chapters of this book: market-based, cost-based and negotiated transfer prices.
Peter Schuster

Chapter 3. Market-Based Transfer Prices

Abstract
The market-based transfer price seems to be the natural option to support the idea of decentralised decision-making and is favoured by many textbooks. This books uses examples in perfect and imperfect market settings and explains reasons why other types of transfer prices are more likely to fulfill the desired functions, i.e. reliable profit allocations and figures on the one hand, and decisions in the best interest of the company as a whole on the other.
Peter Schuster

Chapter 4. Cost-Based Transfer Prices

Abstract
Transfer prices linked to cost figures are most frequently applied in practice. A variety of forms exists and are described in this chapter, including cost-plus, multi-tier, and dual transfer prices. Some of the forms can be shown to fulfill the required functions under the described circumstances.
Peter Schuster

Chapter 5. Negotiated Transfer Prices

Abstract
Transfer prices as the result of negotiations between the divisions involved in the internal transfer of goods and services are the last type examined. They provide the maximum autonomy to the divisions. A multiplicity of conflicts between the managers may be raised by their use. This chapters also looks at a Nash negotiation solution of the problem.
Peter Schuster

Chapter 6. Transfer Prices and Behavioural Control

Abstract
Transfer prices generate an internal market, and are applied for behavioural control. They are therefore also used for cost management and strategy penetration, for the coordination of price decisions and as a strategic means. A case study summarizes the different types and shows a Nash solution by which it can be illustrated that the real optimum typically cannot be achieved by decentralised decision-making.
Peter Schuster

Chapter 7. Summary

Abstract
The main functions of transfer prices are coordination of management and profit allocation of decentralised units. They are an instrument of the company organisation and must be regarded and evaluated in conjunction with other instruments, for example, sales and purchase limits.
Peter Schuster

Chapter 8. Assessment Material

Abstract
To what extent does a conflict exist between the different functions of transfer prices?
Peter Schuster

Backmatter

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