When Organizations Choose to Decentralize Their Operations, Divisions May End

question 163

Essay

When organizations choose to decentralize their operations, divisions may end up exchanging goods and services with one another rather than with external suppliers or customer.Since managers are evaluated based on how well their divisions perform, they want any transaction with another division to generate positive results.
Required:
Discuss the four ways of determining a transfer price and explain the advantages and disadvantages of each.

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Definitions:

Atelectasis

A condition characterized by the partial or complete collapse of a lung or a section (lobe) of a lung.

Diaphragmatic Breathing

A breathing technique that involves full engagement of the abdomen, improving oxygen exchange and decreasing the work of breathing.

Postoperative

Pertaining to the period after a surgical procedure, involving recovery and monitoring for any complications.

Incentive Spirometer

A medical device used to help patients improve the functioning of their lungs, particularly after surgery or during treatment for respiratory conditions.