Examine reasons service companies are more sensitive to labor and price variances
1. Read the article titled, “What Manufacturers Need to Know about Transfer Pricing”. Next, assess the major potential problems that a multinational firm could encounter when using negotiated transfer pricing instead of market-based transfer pricing. Provide one (1) recommendation to the firm on how to avoid these problems.
2. Evaluate the validity of the accounting ethics of creating, initiating, or adjusting transactions to repatriate excess cash for multinational firms in transfer pricing decisions and suggest one (1) way that this practice may be implemented.
3. Use the Internet to research folling forecasts as an alternative to budgets. Next, take a position at to whether or not a flexible budget approach dilutes the value of a budget process in the organization. Provide a rationale for your position.
4. Evaluate the impact to a business when compensation, such as sales commissions and bonuses, are tied to achieving budgeted expectations. Suggest two (2) actions that management can take in order to prevent employees from manipulating results.
5.Use the Internet to research a company that has implemented a balanced scorecard system for evaluating performance. Suggest at least two (2) variance measures the identified company can employ in a balanced scorecard performance evaluation system, and examine how the company can use these variances to improve performance.
6.Examine the main reasons service companies are more sensitive to labor and price variances, as compared to material price variances, and determine the importance of companies managing these variances in relation to sustaining profitability.
