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Thanks, really good explanation, it becomes very clear
In transfer pricing does it mean that when there is external demand and limited capacity the charging of extra units you give priority to selling inside o
Hi it really depends. Say is the 1st example, transfer price to B would be $19-24. In this case A would be willing to selling to B at $19 as it make no difference whether to sell outside the 3000 units. However, in the 2nd example for the additional 3000, transfer to B would have to be $24. This would not be possible for B to accept as they will only be willing to buy at $22 max. Thus when the tutor mentioned if TP is at $23, it give none of the managers to transacts.
In conclusion, it really depends on the TP price in making the decision (cause it will depends on the price A is selling outside). By following the tutor “format” it would easily help to guide you to the decision. Hope this explaination helps. All the best for the coming exam.
@ferrischan, thanks but will i be okay, to say that it depends on the company policy though the best transfer price should be set to allow divisions maximize their profits
best teacher of costing and best way to teach
very helpful, thanks!!
Not running to the end
He’s the best!!!!!!!!!!
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