Transfer Pricing

This topic has 1 reply, 2 voices, and was last updated 13 years ago by seagoat.

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November 26, 2012 at 10:28 am #55759
vanitha
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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
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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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