Birch Paper Company - Case Study

To: <Tab/>Commercial Vice President <Tab/>Birch Paper Company Although the current financial implications for Birch Paper Company are not substantial, as the contract in question is less than 5% of the volume in any division, it is imperative that Birch Company establishes and addresses its transfer price policies and procedures with each division. This will ensure that the divisions are not putting their objectives ahead of the …

…involve having negotiated prices between divisions, in which the divisions themselves could establish the rates, as they would have a more thorough understanding of the cost drivers. When evaluating whether to fulfill a contract internally or outsourcing, it would be beneficial for a cost analysis to be conducted which factored in capacity, inventory levels, and incremental variable costs to determine what would be most profitable alternative for BPC both in the short and long term.