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

Illustrate the problem types of pricing, Pricing is a problem in four gener...

Pricing is a problem in four general types of situations: 1) When the firm develops or introduces a new product and it is fix the price of the product for the first time. 2)

Example of cash discount, M/s ABC's present credit terms are 1/10 net 30 th...

M/s ABC's present credit terms are 1/10 net 30 that they are planning to change to 2/10 net 30.  The current average collection period is 20 days and the variable cost to sales rat

Research, Activity Based costing and Functional Based Costing compare them ...

Activity Based costing and Functional Based Costing compare them together in terms of efficiency, advantages, disadvantages and accuracy.

Describe the benefits of operating decisions - relevant cost, Relevant cost...

Relevant costs and benefits for operating decisions: In operating decisions, concentration is on best use of existing capacity. Incremental analysis based on differential cost

Conditions necessary in a control cycle, Conditions necessary in a control ...

Conditions necessary in a control cycle There are four necessary conditions that must be satisfied before any system can be said to be controlled. Such are as follows: (1) O

Coca Cola Balance Sheet, Required: 1. Using the information provided prepa...

Required: 1. Using the information provided prepare a Balance Sheet. Separate the current assets from non-current assets and provide a total for each. Also separate the current li

Amount of working capital, Number of Operating Cycles: The number of opera...

Number of Operating Cycles: The number of operating cycles in a period is determined by dividing the number of days in a year i.e.365 by the length of net operating cycle. Express

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

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