1. A global corporation sets transfer prices between divisions: Production cost $1,000/unit, External market price $1,200/unit, transfer price $1,100/unit.
   • Requirements:
     • Calculate the impact of transfer pricing on divisional profits.
     • Analyze the tax implications of transfer pricing policies.
     • Recommend a transfer pricing strategy that aligns with tax regulations and divisional profitability goals.
     • Discuss the ethical considerations in setting transfer prices.
     • Evaluate the performance of each division under different transfer pricing scenarios.