Explain about intra company transfer pricing, Managerial Accounting

Assignment Help:

Intra company transfer pricing

A company engaged in production may have several segments division or departments doing production jobs or manufacturing party or fully finished goods. These division may require intra transfer of the goods manufacture by them for a purpose that the finished goods of a division may be used as raw material by the other for further working or proceeding to make another or fully finished goods. The question arises at what price the gaoods should be transferred by one division to the other.

In most of the cases it is the cost price if it is so no division can exhibit its own efficiency of working and can be held responsible for its inefficient. To avoid it each division is treated as semi autonomous in character and it is added to they division it would no doubt fetch greater revenue to itself but the transferee division would be put to s loss as its raw material coming to it form that division would be more costly and therefore this transferee division may like to buy directly from the market rather than to have it from its co division. Therefore in this situation no division would like to fix a price for transfer higher than the market price.

 


Related Discussions:- Explain about intra company transfer pricing

#titlCase Study - Labor standards, Case Study Labor standards Geeta & Comp...

Case Study Labor standards Geeta & Company has experienced increased production costs. The primary area of concern identified by management is direct labor. The company is conside

What procedure are followed in kaizen costing, What Procedure are followed ...

What Procedure are followed in kaizen costing In brief kaizen costing involves setting a new cost reduction target every month. The difference between the target profits and th

What are the advantages of break even charts, What are the Advantages or us...

What are the Advantages or uses of break even charts Computation of break even point or presentation of cost volume and profit relationship by way of break even charts has the

Explain the quick ratio - liquidity ratios, Quick ratio Meaning: this...

Quick ratio Meaning: this ratio establishes a relationship among quick assets and current liabilities Objective: the objective of commuting this ratio is to calculate th

Cost-price-total revenue and quantity changes, Quasar Computers are the fir...

Quasar Computers are the first all optical notebooks and their profit largely affects the manipulations in cost, price, total revenue and quantity changes. The market analysis show

Total annual inventory cost , Ross White's machine shop uses 2,500 brackets...

Ross White's machine shop uses 2,500 brackets during the course of a year, and this usage is relatively constant by the year. These brackets are purchased from a supplier 100 miles

Illustration of coefficient of determination , Illustration of Coefficient ...

Illustration of Coefficient of Determination The production manager of XYZ Company is concerned about the apparent fluctuation in efficiency and wants to determine how labour c

Determine the nature of accounting, The Nature of Accounting Accounti...

The Nature of Accounting Accounting is process of recording, analyzing, summarizing, and interpreting financial (money-related) activities to allow individuals as well as org

Engineering method-cost estimation method, Engineering method These met...

Engineering method These methods are based on the use of engineering analysis of technological relationship between inputs and outputs e.g. method studies and time and motion s

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd