Assume you are the President of a manufacturing firm that has a division that transfers...
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Accounting
Assume you are the President of a manufacturing firm that has a division that transfers products to other divisions within the company. The other divisions have recently complained that the transfer price charged to the departments has increased significantly over the past several quarters. They are frustrated because performance evaluations and bonuses are linked to the profitability of their respective departments. During a recent management meeting, a cost accountant suggests the company can solve this issue by transferring production to another supplier that has a lower cost of production due to lower labor costs. In addition to solving the conflict between departments, the companys overall profitability will increase because of the substantial cost savings. Evaluate this scenario and explain how you would respond as the companys President. Consider the perspectives of various stakeholders in this situation.
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