11/12 Class

Question 1

management controls

Answer 1

evaluating divisional performance using measures
accounting and economic measures
performance ambiguity due to economies of scope
capital allocation
transfer pricing

Question 2

monitor and evaluate performance using Accounting Criteria

Answer 2

Hurdle Rate(expected std of profitability)
Budgeted level of performance
Average level of Profitability
Additional Measures

Question 3

allocating capital

Answer 3

internal capital markets
funding projects that can make a contribution to strategy implementation
Funding efforts to strengthen competencies and capabilities or to create new ones
shifting resources - divesting, downsizing or increasing adjustments
agency issues - corp vs division
merit based allocations
zero based budgeting
internal capital mkts as valuable economy of scope`

Question 4

transferring intermediate products

Answer 4

role of transfer pricing
quantification of economies of scope
realization of economies of scope
   requires optimal pricing 
   measuring opportunity costs and actual costs
transfer pricing methods
   exchange autonomy
   mandated full cost
   mandated market based
   dual pricing

Question 5

compensation

Answer 5

need it