TRANSFER PRICING

Precilia Prima Queena

Vonny Marlen Sandy Mega Aryani

TRANSFER PRICING
What

is Transfer Pricing?

Transfer Pricing Example

Thomas Co. has two division: Division A & Division C

Division A purchases crude oil in Alaska and sends it to division C for transfer pricing $100

Division C purchase crude oil from division A at transfer price $100 and uses it in production into gasoline

TRANSFER PRICING PURPOSE

Performance Evaluation

Optimal Determination of Taxes

TRANSFER PRICING POLICY

1. Cost Based Transfer Pricing 2. Market Based Transfer Pricing 3. Negotiated Transfer Pricing

ADVANTAGES TRANSFER PRICING

Managers motivation increase

Decisions are better and more timely

DISADVANTAGES TRANSFER PRICING

Lack of Measurement Performance

Lack of Profit Company Lack of goal Company