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January 5, 2021 at 8:53 am
Hi John – thanks for another well-organised and easy to understand lecture.
I was just curious as to the pattern of profit between divisions, are there situations where the profits are higher in production divisions or is it more or less always the case that the profits for the selling divisions to be higher than production divisions, or is it just this example? 🙂
John Moffat says
January 5, 2021 at 4:22 pm
Thank you for your comment.
It was just an example. How the profit is split between the divisions depends on the transfer price that is agreed.
October 27, 2020 at 7:40 pm
I mean sir, $15 consists of variable and fixed costs
October 28, 2020 at 7:58 am
It depends whether they have a policy of marginal cost plus or absorption cost plus (just as with ‘normal’ pricing as in my Pricing lectures earlier).
October 27, 2020 at 6:59 pm
Dear John, I hope you are doing well, In regards to cost-plus transfer pricing, Does this cost contain from variable and fixed costs or just variable?
Thanks and Regards.
October 25, 2020 at 9:08 pm
Dear John Sir,
How are you? I hope you are doing good? Thank you for your time and informative lecture. Thank you so much Sir,
November 11, 2018 at 2:42 pm
Sir in example 3 If company B cuts down it’s own cost They would too make a profit right? It would also lead to goal congruence So transfer pricing isn’t the only solution isn’t it? Even if company B cuts down it’s own cost It could too make profit for the division and also for the company too
November 11, 2018 at 7:42 pm
True, but given that most of their costs are the cost of the transfers from A, there are not many costs they can cut are there? 🙂
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