1. Explain the objective of transfer pricing.

2. Explain the difference between a profit center and an investment center.

3. Explain why top management should not rely completely on using income from operations as a performance measure for managers in investment centers?

4. Describe how using the rate of return on investment allows top management to compare and reward managers of divisions of different sizes?

5. Explain why top management of a firm would use a balanced scorecard in evaluating divisional performance?