Transfer pricing Flashcards
1
Q
What are the 4 main approaches to transfer pricing?
A
Transfer prices are….
- Market-based
- Cost-based
- Negotiated
- Administered
(decending efficiency)
2
Q
What should the minimun transfer price be (in many situations)?
A
Minimun transfer price =
Incremental cost per unit (production and transfer) +
Opportunity cost per unit to the selling subunit
