(a) Objectives of Transfer pricing include the following:
(i) Goal congruence: The price should be set so that the divisional management’s desire to maximize divisional profit is consistent with the objectives of the company as a whole.
(ii) Performance evaluation: The transfer price should be set such that it enables central management to effectively determine the contribution of each of the division towards corporate profit.
(iii) Divisional authority: The transfer price should maintain the maximum divisional autonomy.
(iv) Tax minimisation: The transfer price should lead to minimisation of tariffs and income taxes.
(v) Motivation: Transfer price should encourage divisional manager to put in their best.

(b) The company’s contribution as a whole

(i) It is better to sell as intermediate product to earn a contribution of GH₵8,000 per unit than to transfer and earn a contribution of GH₵3,000 per unit. Therefore, transfer should not be made to division B.
(ii) If there is excess capacity, the excess capacity would be 200 units.
The total contribution from excess capacity of 200 units = GH₵3,000 × 200 units = GH₵600,000
The overall profit would be as follows:
Contribution from excess capacity (200 × GH₵3,000) GH₵600,000
Contribution from 800 units = 800 × GH₵8,000 GH₵6,400,000
Total GH₵7,000,000
The 200 units which would be the excess capacity should be transferred at between GH₵12,000 and GH₵20,000 per unit.