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Define the concept of 'transfer pricing'. Explain the problems which can emerge when using transfer pricing in an organisation and discuss a transfer-pricing rule that

Define the concept of 'transfer pricing'. Explain the problems which can emerge when using transfer pricing in an organisation and discuss a transfer-pricing rule that can foster goal congruency. Identify the optimal transfer price under: (i) excess capacity and (ii) no excess capacity. Use examples to illustrate your answer wherever possible.

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