Tom & Jerry are running Hanna Barbera’s lemonade stand as two profit centers. To

Question

Tom & Jerry are running Hanna Barbera’s lemonade stand as two profit centers. Tom makes the lemonade while Jerry sells it. Jerry argues that Tom is transferring the lemonade to him priced too high, which forces him to charge the customers a high price, losing sales. What could be a profitable solution to this transfer-pricing problem? ?a. Move the decision making to Hanna Barbera b. ?Turn Tom’s division into a cost center c. ?Base Tom’s reward on the company profits d. ?Base Jerry’s reward on the company profits

Explanation / Answer

b is correct

Turn Tom's decision into a cost center which is an organisation that provides accounting services.

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