Question

Two emerging fields that are becoming more relevant in management accounting as in other professional areas are environmental issues and transfer pricing. In an increasingly global economy effective management of both environmental and transfer pricing issues may become a source of competitive advantage.

a) How is Environmental Management Accounting used in Decision Making?

b) Why is Transfer Pricing relevant to multinational corporations?

Answer 1

1. Environmental management accounting includes age and analysis of data that backings inside environmental management forms inside an association. The data that is being produced and investigated incorporates both financial and also non financial data.

Environmental management accounting and basic leadership: Environmental management accounting helps the managers of an association to settle on choices in the accompanying territories – product pricing, budgeting, and venture examination, computing expenses and funds of environmental undertakings and setting of quantified performance targets.

Dissimilar to management accounting methods environmental management accounting does not misshape and distort environmental issues. This keeps the managers from settling on choices that are awful for the business as well as for the earth.

2. Transfer pricing, in extremely straightforward terms, is the cost at which divisions of an organization execute with each other. At the end of the day it is the cost at which two related gatherings execute business between themselves.

Transfer pricing is pertinent for multinational corporations as a multinational corporation has divisions in various nations over the globe. For instance P&G's Thailand unit manufactures and pitches Pantene shampoos to P&G's division in India and Sri Lanka. Having a transfer cost will enable P&G to augment its working performance and advance its tax game plans.

In a multinational corporation transfer pricing gives divisional managers significant data about cost and benefit of exchanges that are led on an intra-organization level.