Professional Documents
Culture Documents
CHAPTER
International
Issues in
Managerial
Accounting
14 -2
Objectives
1. Explain the role of the management
accountant in the international environment.
2. Identify the varying levels of involvement
that firms can undertake in international
trade.
3. List the ways management accountants can
manage foreign currency risk.
4. Explain why multinational firms choose to
decentralize.
14 -3
Objectives
5. Describe how environmental factors can
affect performance evaluation in the
multinational firm.
6. Discuss the role of transfer pricing in the
multinational firm.
7. Discuss ethical issues that affect firms
operating in the international environment.
14 -4
Politics
Economics
Marketing
Management
Information Systems
Technology
14 -7
Multinational Corporation (MNC)
A multinational
corporation (MNC)
is one that “does
business in more
than one country in
such a volume that
its well-being and
growth rest in more
than one country.”
14 -8
Example (continued)
Roadrunner Wilycoyote
Duty paid at purchase $ 0 $24,000
Carrying costs of duty 0 1,920
Duty paid at sale 16,800 0
Wilycoyote
pays
Totalduty at
duty-
therelated
point of
Roadrunner payspurchase (6%
carrying costs
duty at point of sale
of $400,000).
(0.12 x 8/12 x
because it is in a
$24,000)
foreign trade zone.
14 -12
Example (continued)
Roadrunner Wilycoyote
Duty paid at purchase $ 0 $24,000
Carrying costs of duty 0 1,920
Duty paid at sale 16,800 0
Total duty and duty-
related costs $16,800 $25,920
Clearly the
advantage
approach
14 -13
AIfcompany
the lawsmay
of the
choose
country
to purchase
permit, anan
existing
multinational
foreign
corporation
company, can
making
simply
the
purchased
set up a wholly
company
owneda wholly
subsidiary
ownedor
branch office
subsidiary.
in the country.
14 -14
It is particularly difficult
to compare the
performance of a manager
of a division in one
country with the
performance of a manager
of a division in another
country.
14 -25
Adapted from Wagdy M. Abdallah, “Change the Environment or Change the System,” Management
Accounting (October 1986): pp. 33-36.
Environmental Factors Affecting 14 -27
Adapted from Wagdy M. Abdallah, “Change the Environment or Change the System,” Management
Accounting (October 1986): pp. 33-36.
Environmental Factors Affecting 14 -29
Cost-plus method
14 -33
Chapter Fourteen
The End
14 -35