Cost Accounting (15th Edition)
15th Edition
ISBN: 9780133428704
Author: Charles T. Horngren, Srikant M. Datar, Madhav V. Rajan
Publisher: PEARSON
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Question
Chapter 22, Problem 22.12Q
To determine
Transfer Pricing:
This refers to a process of pricing in which one sub-unit of an organization charges a price to another sub-unit for supplying a product or service to the sub-unit of the same organization.
To explain: The two reasons because of which dual-pricing system of transfer pricing is not widely used.
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Students have asked these similar questions
Give two reasons why the dual-pricing system of transfer pricing is not widely used.
“Cost and price information play no role in negotiated transfer prices.” Do you agree? Explain.
“Transfer pricing is confined to profit centers.” Do you agree? Explain.
Chapter 22 Solutions
Cost Accounting (15th Edition)
Ch. 22 - Prob. 22.1QCh. 22 - Describe three criteria you would use to evaluate...Ch. 22 - What is the relationship among motivation, goal...Ch. 22 - Name three benefits and two costs of...Ch. 22 - Organizations typically adopt a consistent...Ch. 22 - Transfer pricing is confined to profit centers. Do...Ch. 22 - What are the three methods for determining...Ch. 22 - What properties should transfer-pricing systems...Ch. 22 - All transfer-pricing methods give the same...Ch. 22 - Prob. 22.10Q
Ch. 22 - Prob. 22.11QCh. 22 - Prob. 22.12QCh. 22 - Prob. 22.13QCh. 22 - Under the general guideline for transfer pricing,...Ch. 22 - How should managers consider income tax issues...Ch. 22 - Prob. 22.16ECh. 22 - Prob. 22.17ECh. 22 - Prob. 22.18ECh. 22 - Prob. 22.19ECh. 22 - Prob. 22.20ECh. 22 - Prob. 22.21ECh. 22 - Prob. 22.22ECh. 22 - Prob. 22.23ECh. 22 - Prob. 22.24ECh. 22 - Prob. 22.25ECh. 22 - Prob. 22.26ECh. 22 - Prob. 22.27PCh. 22 - Prob. 22.28PCh. 22 - Prob. 22.29PCh. 22 - Prob. 22.30PCh. 22 - Prob. 22.31PCh. 22 - Prob. 22.32PCh. 22 - Prob. 22.33PCh. 22 - Prob. 22.34PCh. 22 - Prob. 22.35PCh. 22 - Prob. 22.36P
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Similar questions
- Explain one advantage and one disadvantage of the following transfer pricing methods: Cost Market based Negotiatedarrow_forwardC. Highlight ONE (1) advantage and ONE (1) disadvantage of the market-based transfer pricing method.arrow_forwardDiscuss the advantages and disadvantages of a market-based transfer pricing approach.arrow_forward
- Why is there often a conflict between the performance evaluation and cost-minimization objectives of transfer pricing?arrow_forwardWhen is it more appropriate to use market-based transfer price rather than cost-based transfer price?arrow_forwardWhat is Transfer Pricing? What are the approaches in determining transfer prices? In your own idea, identify some best practices in transfer pricing.arrow_forward
- Discuss the advantages and disadvantages of a negotiated transfer pricing approach.arrow_forwardExplain and critically assess the general idea behind transfer pricing. Would it be beneficial for allcompanies? Why?arrow_forwardIn a transfer pricing decision, which of the following factors should be considered? Both A and B None of the above Market price and cost Negotiation and target profitarrow_forward
- What are the calculation formulas for transfer pricing?arrow_forwardThis transfer prices basis is considered to be the most inferior one a. variable cost transfer pice b. full cost transfer price c. negotiatied transfer price d. external market transfer price e. dual transfer pricearrow_forwardDetermining the best approach to pricing requires a cost-benefit trade-off. Explain.arrow_forward
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