Transfer Pricing - Transfer Pricing Transfer Pricing...

Info iconThis preview shows pages 1–6. Sign up to view the full content.

View Full Document Right Arrow Icon
Transfer Pricing
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Transfer Pricing Transfer Pricing Transfer Pricing Transfer Pricing When divisions transfer products or render services to each other, a transfer pricing is used to charge for the products or services When divisions transfer products or render services to each other, a transfer pricing is used to charge for the products or services
Background image of page 2
Benefits of Transfer Pricing Benefits of Transfer Pricing Benefits of Transfer Pricing Benefits of Transfer Pricing 1. Divisions can be evaluated as profit or investment centers. 2. Divisions are forced to control costs and operate competitively. 3. If divisions are permitted to buy component parts wherever they can find the best price (either internally or externally), transfer pricing will allow a company to maximize its profits .
Background image of page 3

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
1. Market price approach sets the price at which the product transferred could be sold to outside buyers. 2. Negotiated price approach allows decentralized managers to agree (negotiate) among themselves. 3. Cost price approach (variable or full) uses a variety of cost concepts for setting the transfer price. Commonly Used Transfer Prices Commonly Used Transfer Prices Commonly Used Transfer Prices Commonly Used Transfer Prices
Background image of page 4
Transfer Pricing—Negotiated Price Approach Transfer Pricing—Negotiated Price Approach 1.Division M produces a product with a variable cost of $10 per unit
Background image of page 5

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Image of page 6
This is the end of the preview. Sign up to access the rest of the document.

Page1 / 20

Transfer Pricing - Transfer Pricing Transfer Pricing...

This preview shows document pages 1 - 6. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online