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Managerial Accounting Report

In: Business and Management

Submitted By Tin1000
Words 1312
Pages 6
Contents
1. Introduction 3

2.0 The effect that each proposed price might have on the attitude of Reading’s management toward intracompany business 3

2.1 Assessment of pricing methods 4

2.2 Should corporate management become involved in this transfer pricing controversy? 6

3.0 Conclusion 7

4.0 References 8

Introduction

This report entails the issues faced by Reading and Millwall in their negotiations with particular focus in how they can come to an agreement on a price that is satisfactory to both divisions. It addresses the effects of each proposed price on Reading’s attitude towards intra-company business; whether the negotiation of a price approach is satisfactory and also advises on whether the corporate management should get involved in this transfer pricing controversy and help to bring about a reasonable settlement.

10 The effect that each proposed price might have on the attitude of Reading’s management toward intracompany business

Each one of the three prices involved in this case will have an effect on the attitude of Reading’s management towards intracompany business. The prices involved are the buying management’s (Millwall), the selling management’s (Reading) and the corporate management’s.

Reading management’s price proposal is the regular selling price less variable selling and distribution expenses. This means that instead of selling the component for $13.00 it will be sold for $11.80. The attitude of the management will be good and favorable towards the intracompany business meaning that if it was to be accepted they would do business any other time again.

However if they were to use the prices proposed by Millwall this might be a different case. Millwall offered to pay Reading standard...

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