"Transfer Pricing System Based on Opportunity Costs": A Reply.

Key Points

• The response aims to clarify the relevance of opportunity costs in transfer pricing systems and address criticisms.
• Engagement with comments made by Akshay K. Talwar.
• Analysis of the budgeted profit approach in transfer pricing.
• Discussion on the evaluation of divisional managers.
• Reinforced the importance of evaluating opportunity costs in transfer pricing.
• Identified inconsistencies in Talwar's evaluation of divisional managers.