Transfer pricing methods, Managerial Accounting

Transfer Pricing Methods

Transfer pricing methods are concerned with the alternative means by which a transfer price can be set and its impact on organizations gauged. Emmanuel and Otley bring together a number of views of transfer pricing methods in practice. Essentially, they report that there are three categories of transfer price: cost based, market based and negotiated. Within the surveys reported, in terms of very rough approximations, about 20% of companies used negotiated prices; about 30% of companies used market values and about half used cost based prices. For each category, a good degree of discretion existed to develop alternative bases at a detailed level. For market based prices, for instance, competitors' prices, list prices, most recent bid and values adjusted by a discount provided alternative bases. The description which follows does not go to such a level of detail but concentrates on four main approaches: absorption cost bases, variable cost bases, market value bases and negotiated value bases. A final section describes the use of linear programming.

Posted Date: 12/8/2012 5:14:54 AM | Location : United States







Related Discussions:- Transfer pricing methods, Assignment Help, Ask Question on Transfer pricing methods, Get Answer, Expert's Help, Transfer pricing methods Discussions

Write discussion on Transfer pricing methods
Your posts are moderated
Related Questions
What are the Changing role of management accounting 1. Focus on customer scarification: customer satisfactions are continuously gaining high priority in management thinking i

importance of ratio analysis

Explain the cost According to controllability: Controllable cost: this is a cost which can be inclined by the action of a specified member of an undertaking. The organization

Negotiated prices Where market based prices are not applicable, it has been argued that allowing managers to bargain with each other in order to establish transfer prices devel

how company apply marginal costing techniques show with an example

Q. What is the issue price for Bond A and B ? On December 31, 20x7, the Jill Corporation issued $20,000,000 of 15 year face value bonds. The bonds pay interest on June 30 and D

State Material price variance Difference among standard price and the actual price of the material is the material price variance. This variance arises because of various facto

JOINT PRODUCT DECISIONS When a manufacturing Company carries out a process operation in which 2 or more joint products are made from a common process a number of decision troub

How to write introduction on strategy plan