Why Don't Upper-Level Managers Simply Dictate Transfer Prices to Divisional

question 136

Essay

Why don't upper-level managers simply dictate transfer prices to divisional managers,and thereby avoid all the hassles and expense of the negotiations between them (divisional managers)?

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Definitions:

Short-Term Debt

Financial obligations that are due within one year or within the normal operating cycle of the business.

Optimal Product Mix

The combination of products that yields the highest profit or efficiency for a company under given constraints and market conditions.

REIT

A real estate investment trust is a company that owns or finances income-producing real estate.

Income-Producing Real Estate

Property that is primarily purchased or developed to earn revenue through leasing, renting, or price appreciation.