TRANSFER PRICING Flashcards by Amara Rose

Q

Max Transfer Price?

Min Transfer Price?

A

Max = Market Price

Min:

if with excess capacity = VC ➕ Avoidable FC
if without excess capacity = VC + Avoidable FC ➕ Loss CM

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Q

Objective of Transfer Pricing?

A

achieve goal congruence
encourage incentive or motivation
maximized net income
avoid sub optimization

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