0 оценок0% нашли этот документ полезным (0 голосов)
1K просмотров14 страниц
Transfer Pricing provides each unit with the relevant information required for making cost-benefit trade-off. It induces the goal congruence among business units and corporation. It helps in measuring the performance of individual profit centers.
Transfer Pricing provides each unit with the relevant information required for making cost-benefit trade-off. It induces the goal congruence among business units and corporation. It helps in measuring the performance of individual profit centers.
Авторское право:
Attribution Non-Commercial (BY-NC)
Доступные форматы
Скачайте в формате PPT, PDF, TXT или читайте онлайн в Scribd
Transfer Pricing provides each unit with the relevant information required for making cost-benefit trade-off. It induces the goal congruence among business units and corporation. It helps in measuring the performance of individual profit centers.
Авторское право:
Attribution Non-Commercial (BY-NC)
Доступные форматы
Скачайте в формате PPT, PDF, TXT или читайте онлайн в Scribd
FACULTY MEMBER INC GUNTUR pgp4149@gmail.com Transfer Pricing
• Definition: Transfer price is the
price charged for goods and services in intra company transfers. • Transfer Price and selling price Objectives of Transfer Pricing It provides each unit with the relevant information required for making cost-benefit trade-off. It induces the goal congruence among business units and corporation. It helps in measuring the performance of individual profit centers. Methods of Transfer Pricing Fundamental Principle Ideal situation Competent people Good atmosphere Market Price Freedom of choice Full information Negotiation Why Market Prices cannot be adopted? Limited markets Capacity limitations Integrated companies Differentiated Products Investment in facilities Short or Excess Capacity in the Industry Market Prices for Units that do not buy or sell outside Published Market Prices Bids Market Prices for similar Products Cost Based Prices
Standard Variable cost
Mark-up Two Step Pricing
Standard Variable cost
Fixed Costs on percentage of facilities used Profit mark-up The transfer price for business unit Z Business Unit 1 Product Expected monthly sales to business center z 5000 units Variable cost per unit $5 Fixed expenses applicable to the Facilities reserved for Z 20 000 Investment in assets 1, 200,000 Return on investment 10 % The transfer price for business unit Z Variable cost $5 Fixed costs applicable 20000/5000 4 Return on investment 1200 000/12 X .1 5000 $11 If the Business Unit Z orders only for 4 000 units, The transfer price is $ 50,000. The variable cost 4000 X 5 and the fixed costs 20,000 plus return on investment 10, 000. The excess of $ 6000 is penalty for Unit Z for not utilizing the capacity. Profit Sharing
The product is transferred to
the marketing unit at the Standard cost of products sold. After the product is sold, contribution earned is shared among the business units, which is the selling price minus the variable marketing and manufacturing costs. Two sets of prices
Under this method, the business unit
which manufactures the product will be credited with the selling prices minus expenses of marketing unit, and,, the marketing business unit is debited with the standard manufacturing cost. This method is most desirable for both the business units and the conflicts between them can be minimized. Pricing of Corporate Services
Control over amount of services
Optional Use of Service The business units may buy these services from the corporate department or 2. They may buy from an outside party or 3. They may develop the facilities on their own or 4. They may seldom using the service at all Administration of Transfer Prices Negotiation Arbitration and Conflict Resolution Executive