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Transfer pricing

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA PM Exams › Transfer pricing

  • This topic has 1 reply, 2 voices, and was last updated 3 years ago by John Moffat.
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    Posts
  • May 4, 2022 at 6:51 pm #654941
    Egana
    Participant
    • Topics: 4
    • Replies: 3
    • ☆

    Hi John! I have a question regarding transfer pricing in terms of limiting factors (for instance time). Suppose we should sell an item with a higher contribution per hour (let’s say we are considering TP for product X with a contribution of $ 10 per hour versus product Y with a contribution of $8 per hour) to division B. My question is: should I consider a lost contribution of $8 in the calculation of TP for product X (I mean should the minimum TP be equal to 8 + variable costs, or only variable costs)?

    By the way, your lectures are brilliant, many thanks for your support!

    May 5, 2022 at 6:36 am #654953
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54696
    • ☆☆☆☆☆

    Thank you for your comment 🙂

    The TP will be the variable costs of X plus the lost contribution by not making Y.

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