Answer to Question #160145 in Management for Prabhdeep

Question #160145

Subject : Business Performance Measurement

1.Write a short note on the organization structure of responsibility centres? (please answer in 150 to 200 words)

2.Write a short note on the administration of the transfer pricing ? (please answer in 150 to 200 words)

Expert's answer

1)The Responsibility Centre is a part or sub-unit of an organization in which the boss has a degree of authority and obligation. The detailed organisation map of the company is a logical basis for the recognition of obligation centres. Numerous divisions within an organization are the most common accountability centres.

Responsibility centres are mainly categorized into four primary cost centre, sales centre, benefits centre and investment core. When comparing the traditional data with the real data, the outcome may be beneficial and unfavourable. If the real data is better than the norm, the outcome is positive and vice versa.

2) Transfer pricing is the price determined by similar bodies under shared control for the internal sale of commodities, intangibles, capital or facilities. ... In short, transfer pricing refers to the amount of money that is traded as two or more similar business companies negotiate with each other.

According to the tax administration, the purpose of Transfer Pricing is to maintain the tax base for transactions between entities deemed to be associated parties and to prevent double taxation for taxpayers.

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