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Transfer Pricing

This topic has 1 reply, 2 voices, and was last updated 12 years ago by seagoat.

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November 26, 2012 at 10:28 am #55759
vanitha
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- Topics: 1
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The company has a policy of setting transfer price at cost + 20%
Div A 15 pu
Div B 5 pu
Selling price 30 pu
calculate transfer price
Ans it shows 15+1.2=18 is tranfer price where does (1.2 come from)
November 26, 2012 at 3:25 pm #108756
seagoat
Member
- Topics: 22
- Replies: 575
Ok first of all it should be
15 * 1.2 = 18
Division A is transferring to Division B at +20% (0.2) to cost
so its either 15 + (15*0.2) = 18
or just 15 * 120% (1.2) = 18 1.2 represents 120%
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