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Evaluate the transfer pricing policy at Toyota Motor Corporation for transactions between its manufacturing division and sales division. Assume the manufacturing division produces cars at
Evaluate the transfer pricing policy at Toyota Motor Corporation for transactions between its manufacturing division and sales division. Assume the manufacturing division produces cars at a variable cost of $20,000 per unit and the sales division sells them at a market price of $25,000 per unit. Discuss the advantages and disadvantages of using market-based, cost-based, and negotiated transfer pricing methods. Recommend an appropriate transfer pricing strategy for Toyota.
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