Professional Documents
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Transfer Pricing
Transfer Pricing
Transfer Prices
Advantages and
disadvantages of
basing
transfer prices on total
costs, variable costs,
and market prices.
Transfers at Cost
Transfers at Cost
What are some examples?
Full cost plus a profit markup
Variable costs
Standard costs
Actual costs
Full cost
Variable-Cost Pricing
Variable-Cost Pricing
Companies heavily
committed to segment
autonomy often allow
managers to negotiate
transfer prices.
Dysfunctional Behavior
Virtually any type of transfer pricing policy
can lead to dysfunctional behavior actions
taken in conflict with organizational goals.
Factors affecting
Transfer prices.
Why?
Transfer
a) Tax regimes
b) Local Market conditions
c) Market Imperfections
d) Joint-venture partner
pricing
b)
Market Conditions
Competition
c)
d)
Tax Rates
a)
f) Import Restrictions
g) Customs Duties
h) Price Controls
i) Exchange Controls