Product details

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Published by: Harvard Business Publishing
Originally published in: 1988
Version: 27 December 1989

Abstract

Examines Siemens' policy for pricing products transferred between the manufacturing and sales divisions of their Electric Motor Works, where both are profit centers. It is unique in that the organizational linkage between the product costing system and the transfer pricing system is highlighted. The issues raised center around the behavior induced by the transfer pricing system coupled with each manager's incentive to increase divisional profits. In addition the students will have an opportunity to discuss the appropriateness of both the transfer pricing system and the profit center structure of the organization.
Location:
Industry:
Size:
DEM400 million
Other setting(s):
1988

About

Abstract

Examines Siemens' policy for pricing products transferred between the manufacturing and sales divisions of their Electric Motor Works, where both are profit centers. It is unique in that the organizational linkage between the product costing system and the transfer pricing system is highlighted. The issues raised center around the behavior induced by the transfer pricing system coupled with each manager's incentive to increase divisional profits. In addition the students will have an opportunity to discuss the appropriateness of both the transfer pricing system and the profit center structure of the organization.

Settings

Location:
Industry:
Size:
DEM400 million
Other setting(s):
1988

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