Injustices in the American Justice System Essay examples

The Justice system seeks to prevent crimes and to capture those who have committed crimes. But what are the causes of crime, maybe poverty, or greed, or is sometimes caused by the system. Is the risk worth the reward and is reward the worth risking the punishment? Power and influence is threaded deeply into the Criminal Justice System. Are all offenders caught and processed with the same demeanor and given the same punishment? The system needs to be impartial to all offenders regardless of the offender’s social position, job or yearly income. The general punishment for most crimes is incarceration in most states with a difference in duration to adjust per each crime. This is the deterrent against crime. This is what should be keeping†¦show more content†¦According to a release from the Bureau of Justice Statistics in the year of 2012 35% of the prison populations were white and 38% were black. (bjs.gov) In the year of 2012 there was only a 3% difference between white and black prisoners, yet according to the US Census Bureau in the year of 2012 in arrests made, white arrests were at seven million, and black was at 3 million. (census.gov) Even with double the arrests made somehow the actual incarceration rate of inmates is still with blacks leading by 3%. As stated above the arrests of white people were nearly double that of black yet the amount of people in prison remains at a 3% difference. Most of it boils down to money, in another census in 2012 the average income of a black male was nineteen thousand, compared to a white male who earned in average thirty thousand. (census.gov) With a higher income they have a better chance of both being able to afford a better lawyer or even paying such fines to avoid jail. People are not afforded the same chances equally in this system. Those with a higher income can afford a better lawyer and a better lawyer who can argue down the punishment. It is a flawed idea to allow criminals to lighten their punishm ent with money. Inequalities exist within every system. Stories are often told of people escaping punishment for crimes due to their â€Å"acting†. When one asks, are all criminal offenders given and offered the same opportunities? TheShow MoreRelatedInjustice Of The American Justice System1937 Words   |  8 PagesInjustice for all appears to be the recent motto of the American justice system in the previous years. This system, increasingly known, infamously, for the wrongful incarcerations of many innocent citizens is in large part due to prejudice and a lack of due diligence by society s finest, the police. Police departments’ focus on making the collar often leads to the use of various forms of torture such as mental, emotional, and even physical coercion. Errors of fact fail to be discovered, and wrongfulRead MoreInjustice Is An Unfair Treatment1209 Words   |  5 Pagesexamples of injustice in America? Before you start to answer that question, consider what the word injustice m eans. Injustice is like a plague. If one person doesn’t speak up about unfair treatment, they are allowing injustice to infect everyone. The Webster dictionary definition states, â€Å"Injustice is an unfair treatment or situation in which the rights of a person or a group of people are ignored (Merriam-Webster).† There are various examples of injustice in the Criminal Justice System, the occupationRead MoreInjustice Is An Unfair Treatment1212 Words   |  5 PagesInjustice in America What are some examples of injustice in America? Before you start to answer that question, consider what the word injustice means. Injustice is like a plague. If one person doesn’t speak up about unfair treatment, they are allowing injustice to infect everyone. The Webster dictionary definition states, â€Å"Injustice is an unfair treatment or situation in which the rights of a person or a group of people are ignored (Merriam-Webster).† There are various examples of injustice in theRead MoreTime to Kill1283 Words   |  6 Pagesminorities in America. All jurors were white and with the combination of racism it made it seem like injustice was certain. For example, Jake Brigance, the lawyer for Carl Lee filed for a change of venue. The reason for this was that he knew the jury would be comprised of white jurors, where his client was of African American decent. He knew that a white jury would be racially prejudicial towards an African American defendant. At this time in Am erica, such an assertion would not have been unfounded. SimilarlyRead MoreAnalysis Of Lauryn Hill Mystery Of Iniquity1347 Words   |  6 PagesNov.14.2017 Eng. 102 Lauryn Hill Lauryn Hill was and still is an iconic individual of the African American Hip Hop genre. 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In my opinion, individuals and sovereign institutions share the moral responsibility for the structural injustice that results when implicit bias influences discretionary actions in the criminal justice system, but the greater responsibility is vested in officials w ith authorityRead MoreCommon And John Legend Did A Collaboration On The Song `` Glory ``1149 Words   |  5 Pagesminority especially African Americans. Freedom is supposed to be a top priority for us (society). However, nobody realizes that African Americans do not have any freedom because we are being oppressed by society as well as the government. The speaker’s perspective is coming from African Americans that are fed up with the injustice in today’s society and they would like to fight for their freedom, equality, glory, and respect. The speaker’s intended audience is African Americans, Caucasians, Law enforcersRead MoreAnalysis Of Lauryn Hill Mystery Of Iniquity1321 Words   |  6 Pagesfrom New Jersey expresses her strong emotion on the justice and legal system in her song, Mystery of Iniquity. The Mystery of Iniquity is a verse taken from the bible; 2 Thessalonians 2:7. The word iniquity means immoral or grossly unfair behavior. In her song, she exposes her truth and views of the legal system. She touches on multiple topics such as religion, policing, court systems and orders, the president, and the amount of African Americans incarcerated. This song was released in the early 2000sRead MoreRacism And Inequality : An Adult Homework Helper For The Sumner Library870 Words   |  4 Pageshas been centered around injustice and inequality in society. These ethical questions explored in our literature are inherently tied to public life in that they analyze how communities and societies should handle these injustices. Multiplication is for White People by Lisa Delpit and the episode of the podcast â€Å"This American Life: Three Miles† illustrate the systemic inequality ingrained in the educational system of the United States, while Michael J. Sandel’s book Justice explores how communitiesRead MoreEssay On Social Injustice1495 Words   |  6 PagesSocial justice has changed lives through consistent group organization, cons istent preparation, and with the creation of a strong foundation and leaders. Social justice is the idealization that society gives groups or individuals from a variety of different backgrounds and representations the right to equally share benefits such as opportunities and resources along with being treated fairly by others from all backgrounds and statuses (Chung Bemak, 2011). As a society, we hear less about social

Intrinsic and Extrinsic Motivational Strategies Free Essays

string(77) " the emphasis is furthermore not put on the culmination of the activity \(i\." The aim of this study is to explore how both intrinsic (i.e. perceived enjoyment) and extrinsic (i. We will write a custom essay sample on Intrinsic and Extrinsic Motivational Strategies or any similar topic only for you Order Now e. perceived usefulness) motivations can be use by team leaders to empower and motivate their teams to reach their fullest potential. Numerous theories were scrutinised in order to analyse the two theoretical concepts and their applicability to organisations. The outcome of the research suggested that there is no cohesive strategy, or â€Å"strategic fit† that would apply directly to a specific situation, instead it was conclude that in organisation creative people are motivated from within and respond better to intrinsic rewards than extrinsic ones. INTRODUCTION Since the 21th century, the study of motivation became one of the most complex and fascinating topics in organisational psychology (Muchinsky 1996). The different theories and conceptions about employee motivations and how leaders can use the available literatures to enhance their employee’s performance have been discussed by many researchers (e.g Krueger, 1996, Herzberg, Mausner snyderman 1993). Motivating people at work is a crucial component of organisational behaviors and psychology. Leaders can use motivation to improve the physical and well-being of the organisation and its human capital, as a logical approach to enhance productivity and profitability (Hatch, 2002). Motivation is the inner drive that makes people act in a certain way (Herzberg, 1987), and it goes by the saying that â€Å"a well motivated and satisfied employee performed better than unsatisfied employees†. Work motivation phenomenon The pursuit for higher motivations at all levels of works has seemed treacherous in almost every organisational perspective. The unpredictability of human character and variegated mind-sets in human nature has made this phenomenon a challenging philosophy for every manager and researchers. Theoretical discussions gathered from the generalised conceptions of motivation argued how a team of people in different circumstances can meet with different stimulus; and what are the factors that energizes human behaviors and how these behaviors can be manage or channels to different directions. During the 1930s, Lewin (1938) attempted to analyse some of the factors that affected employees degree of motivation, amongst the divergent set of factors examined, he came up with a suggestion that subject perceptions is the main cause for employees motivation and de-motivations. Studies done by Deci and Ryan (1985a) classify human motivations into two aspects, intrinsic and extrinsic motivation. The concepts of these two theories (intrinsic and extrinsic motivations) explain in details why a task is carried out and what type of motivational drive causes certain behaviours. The concept of extrinsic and intrinsic The concept of extrinsic and intrinsic motivation is quite problematic simply because the two theories work in opposition (Deci Ryan, 1985a). More straightforwardly expressed, intrinsic motivation is driven by a person’s internal interest and desire to do something, such as curiosity, enjoyment, and sense of challenge. Extrinsic motivation comes from outside a person, such as reward, promotion, or deadline (Amabile, 1997). Extrinsic motivational factors Extrinsic motivational factors refer to the performing of an activity in order to achieve an external goal. Noels (2002) cited Deci Ryan’s (1985a) self-determination theory which suggested that the external goals you strive for vary as to the extent of how much they are in fact self-determined. Extrinsic motivational factors serve mainly through monetary compensation, where wage, bonuses and result sharing are main applicators. When regard as such, an individual employment is merely a tool of satisfying direct or actual need by means of the money it generates (Frey and Osterloh, 2002). Monetary non-monetary motivational factors Non-monetary motivational factors simply refer to symbolic issues such as work promotion, rewards, development training courses, health benefits etc. A leader can use this approach to motivate team members as the need for employee recognitions are crucial. Such rewards can leave a symbolic effect on employees and group solidarity, which may ultimately enhance team performance (Lawler, 1990). Monetary motivation On the other hand, monetary motivational factors have a substantial cost of extrinsic value. A team leader can use salary/pay rise, bonuses or stock options to get people motivated within a team or organisation. Salary According to Maslow’s hierarchy of needs theory (1943) salary increment is a proactive way to motivate employees. Herzberg (1993) believes that salary belongs to hygiene factors and can prevent job dissatisfactions. Lowering salary or salary demotion can significantly de-motivate employee’s enthusiasm. A leader can use salary increments or other forms of monetary rewards as a major strategy to influence employee job satisfaction (Lawler, 1990). Bonuses and commission Many organisations have adopted the means of bonuses and commissions to motivate employees in the organisation so that they could create synergy and reach the organisation goals (Lawler, 1990). It is often used to reach short term goals in order to stimulate the employee to work harder right away. Bonuses and commission are vital strategy especially when calculating people performances and contributions towards the organisation success (Hatch, 2002). Collective individual A collective motivational factor mainly focuses on team performance targets. Leader can use this motivational factor to provide a team with a fair distributive justice; such as equal pays and bonuses. On the contrary, many managers use individual motivational factors to few members of the organisation and contingent on individual performances (Chen et al, 1999). In opposition to those provided to a group these tend to be very differential. Intrinsic Motivational factors Intrinsic motivational factors regarded as the core activities and motivators of job satisfaction. The person performing the task is motivated because he or she enjoys the challenge and is not pushed upon it by external reward or pressure. Intrinsic motivation occurs because it is said to provide satisfaction of inner psychological needs (Frey and Osterloh, 2002). These psychological needs can be divided into three essential aspects from which intrinsic motivation can derive from: Job satisfaction The phenomenon of job satisfaction ultimately derived from the two theories discussed in the above literatures; monetary and non-monetary factors. But more specifically, job satisfaction is more associated job enrichment, achievement, job security, well-being, work values, turnovers, responsibilities and autonomy (Mitchell et al, 2001). When job satisfaction is attained by an individual, the emphasis is furthermore not put on the culmination of the activity (i. You read "Intrinsic and Extrinsic Motivational Strategies" in category "Essay examples"e. the completion), but satisfaction is also obtained through the process resulting in the completion (Frey and Osterloh, 2002). Rewards The issue of rewards is one of the most complicated problems when creating a well functioning and motivating team. According to Hatch, (2002) rewards are major tools a leader can used to retain, attract, motivate and satisfy employees. The whole concept and essence of rewards is to improve effectiveness and efficiency. When leaders aligned rewards with the organisational goals, efficiency is enhanced (Stredwick John, 2000). And whiles organisational goals are achieved; it is likely that the employees achieved their own personal goals (Atkinson Anthony A et, al., 1997). It is quit complicating for leaders to rightfully suggest the rewards that would fit each employee within a team simply because people needs change as they enter new stages of their life/career (Hatch, 2002) Personal goals achievement It is not just organisational goals that are the only set targets by employees; people also aligned their own goals along with the organisation goals (Atkinson Anthony A et, al., 1997). Leaders in every works of life must assist and encourage their employees to set achievable personal goals to in order enhance their employees’ potential. Discrepancies and comparisons between the two theories Intrinsic versus extrinsic motivation Since analysts figured that employees are the key success factors to every organisation, different strategies had been outlined on how firms can get the best from their employees. However, there is no cohesive strategy or â€Å"one-fit-all-strategy† that will determine employees’ work motivation. In the late 1990s, Amabile’s (1997) investigates the comparisons and discrepancies between the two theories. Amabile’s research revealed that extrinsic motivation may combine with intrinsic motivation as a synergism instead of an antagonism under three conditions. Firstly, employees must be well devoted or be in a high intrinsic motivated state. A well devoted employee is like a loyal customer, regardless of the financial benefits or attractiveness; it is very unlikely that extrinsic motivation will undermine the intrinsic motivations. Secondly, Amabile tend to be versatile in his theoretical concepts. She suggested that some aspect of extrinsic motivation must adhere to. He cascaded extrinsic motivations into three different components, such as; informational and enabling and referred to them as synergistic motivators, which implies competences or improve performance like rewards, feedback, and recognition that confirm competence or provide information on how to improve work-related performance. And controlling motivator which is a directive approach and can executed when employees are being told on how efficient the work can/could have been done. Contrariwise, intrinsic motivations ignite a powerful inner drive or feelings of contentment that when employees meet their goals or undertaken activities they get total satisfactions. Frey and Osterloh (2002) further expanded the studies of in intrinsic motivations and suggested five critical aspects which intrinsic motivation can derive from. The more complex, challenging and demanding the activity, the more complicating it is to pinpoint the requirements in a hard-and-fast job description, the more crucial intrinsic motivation becomes.† (Frey Osterloh, 2002:21). Frey and Osterloh assumptions are: Firm-Specific Pool Resources Employee actions in an organisation have a tremendous ramification to the firm privies. Such actions may reflect and incorporate the company reputation, relationship with potential clients, corporate culture etc. In such circumstances, a self-centred employee with personal interest within an organisation may profit enormously from the organisation without making any contribution to the pool resources. It is quit difficult for leaders to satisfy or motivate such people; and their influences over other employees may de-motivate or hinder others work performances significantly (Konrad Pfeffer, 1990; Greenberg, 1990). In such case, well devoted employees that are motivated intrinsically will unify and support the firm-specific resource pool (Frey Osterloh, 2002). Multi-Tasking Employees are more intrinsically motivated when they are encouraged to explore and develop their potential, if they can perform multiple tasks within their organisation, (Frey Osterloh, 2002). Such strategy unites employees and open new doors to team spirit. Consequently, the higher complexity and diversity the work signifies, the more imperative the intrinsic motivation becomes (Holmstrom Milgrom, 1991). Fuzzy Tasking Whenever extrinsic compensation materialises, people mostly react unassumingly to the firmtarget goals. People will become unpredictable when they are faced with multiple alternatives and free choice among work targets; it is difficult to get them pursuing the challenging tasks (Frey Osterloh, 2002). The more financial incentives that are introduced to some people, the more effortless they become and they can also easily quantify tasks to facilitate the monetary compensation. Such behaviours are not favourable for a highly competitive company. The Transfer of Tacit Knowledge The transfer of tacit knowledge is one of the most essential elements of the core competence that differentiate a firm from its competitors. People are intrinsically motivated when they possesses more tacit knowledge than explicit knowledge (Polanyi, 1985) as this can enable them to work and support others with the information and knowledge they have. Creativity and Innovation Creativity and innovations can nurture and harness employee’s involvement and motivations significantly. Frey and Osterloh (2002) believed that when people are extrinsically motivated, it reflects a negative effect on the learning curve and the innovation processes. Amabile, (1996, 1998) support the concept and opined that extrinsic motivation can severely pressure employees to produce, since results often are demanded for the compensation to redeem. Left behind is an inaccurate and less meticulous result, which has been affected strongly by a monitored and less creative way of inventing (Amabile, 1996). Conclusion From all the analysis scrutinised above we can see that these two motivational theories are under researched and underexplored as there is no cohesive strategy or â€Å"strategic fit† that is directly applicable to a specific circumstances. The theoretical conceptions about these theories argued above; point out that employees are motivated when they are driven by either internal or external interest, or desire to do something. Hence human wants and mind-sets are variegated as they enter new stage of their life/career; it will remain a challenge for managers and researchers alike, to strategize the right rewards strategy that will applicable to all employees. However, from the analysis we can see that not all employees are intrinsically motivation, but creative people can seem to be more motivated from within and respond much better to intrinsic rewards that extrinsic ones. Depends on organisational specific; it is advisable that a team leader assess individual employees rewards needs and evaluate what strategies applicable for the team. How to cite Intrinsic and Extrinsic Motivational Strategies, Essay examples

Business Transfer Pricing Methods

Question: Describe about the Business Transfer Pricing Methods. Answer: Part A Transfer price is the price at which goods or/and services are bought and sold (transferred) between divisions of the same corporations. For example, in an automobile manufacturing company, if the subsidiary which manufactures tires sells them to the parent company, the price paid by the parent company for the tires is called the transfer price. The divisions of a large multi-department company can be treated as separately run companies with the use of transfer pricing. In contemporary accounting, different divisions of an organization are run as profit-centers, i.e they are accountable for their own profits. Now if a division transfers its goods to another division of the same company, what price should it use to determine its contribution margin? Similarly, if a division accepts transfers from another division, what cost should reflect on its profit and loss statement for these goods? A transfer price is used to determine these prices and costs. (Schuster, 2010) Different divisions of a company may be located in different countries with different tax norms. A company may use transfer pricing to lower its tax liabilities by lowering the profits of divisions located in countries with higher taxes. Similarly, it can raise profits of divisions which are located in countries with lower tax-rates, also known as tax havens. Therefore, there are regulations put in place by various governments on transfer pricing to curb corporate tax avoidance. (Chand, 2014) Transfer prices can be of following types: Market based transfer price: In this type of transfer pricing, transfer price is set equal to the market price of the product that is transferred. Such kind of transfer pricing is used when the market is perfect for the product that is transferred i.e The product should be homogenous i.e there should not be similar products with difference in quality. It should be as close to a commodity as possible. For example the capacitors that are used in a television are very close to a commoditized transferred product. There should only be one price of the product in the market for both the buyer and the seller. The seller should be able to sell the product in the market at the same price at which the buyer is expected to purchase that product in the market, at the least. For example, if the seller can sell the product at $90 in the market, the buyer should have to pay at least $90 in the market to buy the product. There should be no variable buying or selling costs. It should not be the case that if the seller wants to sell the product in the market instead of transferring it to the buyer, he has to incur an extra selling cost. Similarly, it should not happen that if the buyer wants to buy the same product in the market rather than transfer it from the seller, he has to incur excess transactional costs. The selling division should be operating at full capacity and should able to sell whatever quantity of product it is producing. In this case, the seller will have to forego external sales if it transfers any amount of product to the buyer. In order to compensate for the opportunity cost, the amount lost due to loss of external sale should be included in the transfer price. Thus, transfer price is equal to the market price. (Burkadze, 2016) In this type of transfer pricing, the minimum transfer price would be equal to the maximum transfer price and both the seller and the buyer would be happy with the market price as being the transfer price. This transfer pricing will help in providing a good basis for performance evaluation and reduce the animosity between divisions. However, such a kind of transfer pricing is rarely seen practically as there is always a certain amount of product differentiation which leads to there not be a single price for the product. Also, the market price may vary over very short periods of time due to external reasons such as promotions or the seasonality of the product.(APM Stuff, 2011) Cost- based transfer pricing: Full Cost Plus Pricing: Full cost includes the variable cost as well as the fixed cost involved in the production of the transferred product. Here the transfer price is set as the full cost plus some mark-up. This type of transfer pricing ensures a positive contribution margin for the selling division. However, the buying division may not be happy with this transfer price if it is greater than the market price of the product. Such kind of transfer pricing is suitable when there is no external market for the transferred product. Marginal Cost Plus Pricing: Marginal costs means the sum of all variable costs. It is the incremental cost incurred by the seller to produce the good or provide the service. Here the transfer price is set as the marginal cost plus some mark-up. It does not ensure a positive contribution margin for the seller. Selling division needs to add attach sufficient margin in order to recover its fixed costs. The selling division may not like this kind of transfer pricing if as it involves the risk of not recovering the fixes costs. The buying division will accept the transfer price if it is lower than the market price. This kind of transfer pricing is suitable when the selling division has some unused capacity. Marginal Cost Plus Opportunity Cost Plus Pricing: Opportunity cost is the loss of external sale opportunity due to selling of the product internally to the buying division. Marginal cost + Opportunity cost is the minimum transfer price that the selling division would accept. For selling division, there would be an incentive to transfer internally if a mark-up is added rather than selling it externally. Buying division will accept the transfer price only when the transfer price is lower than the market price. Such type of transfer pricing is used when there is no unused capacity at the selling division but there is still unmet market demand.(Investopedia, 2013) Negotiated transfer pricing: This type of transfer pricing is used in case of an imperfect market. In case of an imperfect market, there are transaction costs both for selling and buying division if they want to buy or sell in the external market, there are different market prices for the product. In such cases transfer prices cannot be set at market prices as the selling or buying divisions would work inefficiently at those prices. The management has to intervene in such situations to arrive at a negotiated transfer price between the buying and the selling division. The negotiated transfer price would lie between the minimum price at which the selling division is willing to sell and the maximum price at which the buying division is willing to buy. The negotiated transfer pricing can however be time consuming and can lead to sub-optimal decisions. It is strongly influenced by the bargaining skills of the selling and the buying division managers. Transfer pricing is used by the top level management of the corporations for the following purposes: Profit Allocation: Transfer prices are used by the companies to determine the profits of its various divisions, which are further used for appraisals and other financial reports. While transfer price is the revenue for the selling division, it is the purchase cost for the buying division. Multi-entity Corporations use the synergies between various divisions to lower their costs and increase their overall profits. Coordination: When a company is divided into divisions and divisional profit is the main determinant of performance measurement, divisional managers can make decisions keeping in mind only the profits of the divisions and not the company as a whole. This can lead to goal incongruence. Transfer prices decided by the centralized (top) management can influence the behavior of divisional managers and steer them to work for the betterment of the corporation. A higher transfer price leads to change in the production process of the buying division, leading them to a higher efficiency, as it reduces the amount bought by the buying division. A lower transfer price can lead to similar effects on the selling division. This exercise is also known as goal congruence. Calculation and cost accounting: Transfer prices are used to determine the cost of goods produced for the buyer division and the revenues for the seller division. This is further used for external regulatory purposes or for third party purposes. Transfer prices lead to simplification of a lot of cost accounting calculations. Tax Accounting: Transfer prices are used for optimization of taxes by the organizations and for other related payments. Companies structure their transfer prices based on such considerations. Some companies can (and do) manipulate their transfer prices using practices which are not always ethical to save tax liabilities. OECD has laid out guidelines to prevent such manipulations and applies the arms length principle. This principle requires the divisions to treat other divisions at an arms length, i.e as if the divisions were completely separate companies. They have to determine the arms length price, which can be difficult for cases where the product are differentiated. Different governments have entered into agreements between taxpayers regarding settling on transfer prices. They are called advance pricing agreements or APAs. APAs are based on well research documentation prepared by the taxpaying corporations for the government. They require a lot of negotiations between the taxpayer and the designated government tax authority. These agreements are generally effective retrospectively. Fraudulent transfer pricing is strongly dealt with by the governments and the relevant authority. Known as transfer mispricing, fraudulent transfer pricing relates to adjusting of transfer pricing by corporations to deceive tax authorities. For example, companies may have 2 subsidiaries with one in a tax haven and other in a high-tax regime. The one in tax haven will sell its product to an intermediate subsidiary at a low price resulting in low tax. While the intermediary will sell to the division in a high tax regime at artificially high prices so as to show low profits and hence low taxes. Such kind of manipulation is leading to capital flight from developing countries of Asia and Africa. (Lanewala, 2011) Part B Transfer pricing should not be based on total actual costs as this practice can be misused. An inefficient department can pass on its excess costs to the division which is buying its product and hence hide its inefficiencies. The division buying the product will hence have to show higher costs due to the higher price it is paying to the inefficient producing division. Similarly, an efficient producing division will have to sell its products at lower prices to the buying division, which can exploit the lower transfer costs to show higher margins. Thus, transfer prices based on total actual costs would not give a fair assessment of divisional performance. Cleaning and Scraping Division Processing Division Sale Price 95 160 Transfer Price 0 95 Direct Material 18 5 Direct Labour 12 10 Manufacturing overhead (variable) 30 10 Variable Selling Cost 5 0 Contribution margin 30 40 Following would be the price range acceptable to both divisions if negotiated transfer pricing is used and firms are allowed to buy/sell in the open market: Upper Limit: Market price = 95 Lower Limit: Total production cost + 20% margin = Direct Material + Direct Labour + Manufacturing overhead + 20% margin = 60 +12 = $72 Therefore the price range would be $72 - $90. As discussed in Part c, lowest transfer price acceptable to Cleaning and Scraping division would be $72. This would not be preferred by the manager of the Cleaning and Scraping division as it would mean a contribution margin of only (72-60=) $12. If it sells on the open market it would mean a contribution margin of $30. Thus the Cleaning and Scraping division will lose ((30-12)*400000=) $7,200,000 by accepting a transfer price of $72. This would not show a good performance by the Cleaning and Scraping division manager. References: APM Stuff, 2011, Different Types of Transfer Pricing Methods, Blogspot, viewed September 16, 2016 https://apmstuff.blogspot.in/2011/07/different-types-of-transfer-pricing.html Burkadze, E., 2016, Interaction of Transfer Pricing Rules and CFC Provisions, International Transfer Pricing Journal, viewed September 16, 2016 https://www.ibfd.org/IBFD-Products/Journal-Articles/International-Transfer-Pricing-Journal/collections/itpj/html/itpj_2016_05_int_3.html Chand, S., 2014, 5 Types of Transfer Pricing Methods used in International Marketing, Your Article Library, viewed September 16, 2016 https://www.yourarticlelibrary.com/product-pricing/5-most-important-types-of-transfer-pricing-methods-used-in-international-marketing/5820/ Investopedia, 2013, Transfer Price, Investopedia, viewed September 16, 2016 https://www.investopedia.com/terms/t/transferprice.asp Lanewala, M., 2011, Types of Transfer Pricing for Measuring Evaluating Divisions, Management Accounting, viewed September 16, 2016 https://managementaccounting.accasupport.com/2012/08/types-of-transfer-pricing-for-measuring.html Schuster, P., 2010, Transfer Prices: Functions, types and behaviuoral implications, questia, viewed September 16, 2016 https://catalog.flatworldknowledge.com/bookhub/reader/4402?e=heisinger_1.0-ch11_s08