AB Thorsten Transfer Pricing Template 0809

AB Thorsten Transfer Pricing Template 0809 - 300 kr 300 kr...

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11/09/2011 17:09:09 d606a1ceee3d6c0e01f7e82656d265c7769a5f41.xlsx AB Thorsten Transfer Pricing If XL-4 is manufactured in Belgium, Ekstrom will have to negotiate a "fair" transfer price with Lambert, Lavanchy and Gachoud. Alternatives you could consider include: 1. Transfer at Variable Cost of skr 930 per ton + 10% for profit & admin = skr 1,023 per ton cost-plus 2. Transfer at Variable Cost + Belgium fixed costs (skr 180 per ton) + 10% = skr 1,221 per ton cost-plus 3. Transfer at market price less 25% volume discount = skr 1,500 per ton resale Assume Market Price is skr 2000; Belgium fixed costs are skr 180 per ton; and Sweden Selling & Admin are skr 300 per ton. Remember, bonus is based on profit! Sweden Profit Alternative 1 Alternative 2 Alternative 3 Alternative 4 Market Price 2,000 kr 2,000 kr 2,000 kr 2,000 kr Transfer Price 1,023 kr 1,221 kr 1,500 kr 1165.5 Shipping & Duty 450 kr 450 kr 450 kr 450 kr Gross Margin 527 kr 329 kr 50 kr 385 kr Selling & Admin
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Unformatted text preview: 300 kr 300 kr 300 kr 300 kr Sweden Profit 227 kr 29 kr -250 kr 84.5 kr Profit % Revenue 11.4% 1.5%-12.5% 4.2% Belgium Profit Alternative 1 Alternative 2 Alternative 3 Your Plan Transfer Price 1,023 kr 1,221 kr 1,500 kr 1,166 kr Variable Cost 930 kr 930 kr 930 kr 930 kr Fixed Cost 180 kr 180 kr 180 kr 180 kr Belgium Profit-87 kr 111 kr 390 kr 55.5 kr Profit % Revenue-8.5% 9.1% 26.0% 4.8% Assignment: Sit with your neighbor and review the profitability analysis for Sweden and Belgium shown above. Then, based on the analysis, negotiate a transfer price that would be acceptable to both of you. AGREED TRANSFER PRICE: Swedish Proposal (in Skr.) Net Cash Flows 1 2 3 4 5 6 7 (756,000) 103,000 153,000 215,000 215,000 215,000 145,000 360,000 NPV (at 8%) 247,005.09 IRR 16% Belgian Proposal (in Skr.) Net Cash Flows 1 2 3 4 5 6 7 (54,000) (13,000) 23,000 69,000 69,000 69,000 69,000 143,000 NPV (at 8%) 233,054.31 IRR 53%...
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