Transfer Pricing

This topic has 1 reply, 2 voices, and was last updated 8 years ago by John Moffat.

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July 28, 2017 at 3:54 pm #399182
mjibola
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Hello John,

I know fixed cost would remain fixed, but do we strictly calculate transfer price using the marginal cost principle only? When could it be sensible to consider fixed cost? When an incremental fixed cost arises? The technical article on the ACCA website on transfer price didn’t consider and I’d like to know.
July 28, 2017 at 6:55 pm #399208
John Moffat
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Yes – it would only be sensible to include fixed costs if transferring to the other division resulted in additional/incremental fixed costs 🙂
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