What question did this study set out to answer?

The aim is to examine how using incremental costs as transfer prices can enhance goal congruence within companies.

Transfer Prices: An Exercise in Relevancy and Goal Congruence.

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This article demonstrates the impact of incremental costs on goal congruence in companies, suggesting improvements for managerial decision-making.

The aim is to examine how using incremental costs as transfer prices can enhance goal congruence within companies.
Analysis of managerial behavior regarding cost accounting practices
Evaluation of the relevance of sunk costs in decision-making
Comparison of incremental costs with market prices in transfer pricing
Incremental costs lead to improved goal congruence among company managers
Sunk costs are often deemed irrelevant by decision-makers
Market prices may not serve as valid and relevant transfer prices, undermining goal congruence.

Billy E. Goetz (1967) studied this question.

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This article demonstrates the impact of incremental costs on goal congruence in companies, suggesting improvements for managerial decision-making.