transfer pricing

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November 24, 2017 at 5:25 pm #417858
adarsh1997
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” The fixed costs of the selling division become variable costs in the transfer price of the buying division.”

– Could you explain how could that be a disadvantage of setting a TP at full cost plus?
November 24, 2017 at 5:29 pm #417864
John Moffat
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Because the fixed costs of the selling division will not change by transferring more. Using full cost plus will be charging as though they are changing.
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