CHAPTER22Management-ControlSystems,TransferPricing,andMultinationalConsiderationsCopyright?2015PearsonEducation

Chapter22learningobjectivesDescribeamanagementcontrolsystemanditsthreekeypropertiesDescribethebenefitsandcostsofdecentralizationExplaintransferpricesandthefourcriteriamanagersusetoevaluatethemCalculatetransferpricesusingthreemethodsIllustratehowmarket-basedtransferpricespromotegoalcongruenceinperfectlycompetitivemarkets22-2Copyright?2015PearsonEducation

Chapter22learningobjectives,concludedUnderstandhowtoavoidmakingsuboptimaldecisionswhentransferpricesarebasedonfullcostplusamarkupDescribetherangeoffeasibletransferpriceswhenthereisunusedcapacityandalternativemethodsforarrivingattheeventualhybridpriceApplyageneralguidelinefordeterminingaminimumtransferpriceIncorporateincometaxconsiderationsinmultinationaltransferpricing22-3Copyright?2015PearsonEducation

ManagementControlSystemsAmanagementcontrolsystemisameansofgatheringandusinginformationtoaidandcoordinatetheplanningandcontroldecisionsthroughoutanorganizationandtoguidethebehaviorofitsmanagersandotheremployees.Somecompaniesdesigntheirmanagementcontrolsystemaroundtheconceptofthebalancedscorecard.Well-designedmanagementcontrolsystemsuseinformationfrombothwithinthecompanyandfromoutsidethecompany.22-4Copyright?2015PearsonEducation

ManagementControlSystems,cont’dConsistofformalandinformalcontrolsystems:Theformalmanagementcontrolsystemofacompanyincludesexplicitrules,procedures,performancemeasures,andincentiveplansthatguidethebehaviorofitsmanagersandotheremployees.Theformalcontrolsystemiscomposedofseveralsystemssuchas:Themanagementaccountingsystemforinformationaboutthefirm’scosts,revenuesandincome.Thehumanresourcessystemforinformationabouttherecruitingandtrainin