Transfer price is a mechanism which is used for evaluating the value of goods and services. These are provided by the profit centre of an organization to other responsibility centres. Right calculation of transfer price is very important as it has an effect on other responsibility centres of that company.
Factors of Transfer Price
While evaluating any right transfer price, there are few factors which should be considered.
- Measuring the divisional profitability correctly.
- Ensuring that a unit’s authority and autonomy is preserved in the best way.
- Motivating the centre managers for better work.
Links of Previous Main Topic:-
- Activity based costing introduction concept and classification
- Introduction inventory pricing and valuation
- Standard costing introduction
- Management accounting
- Marginal costing
- Relevant cost for decision making
- Budget and budgetary control
- Limitations of historical accounting
- Introduction to responsibility accounting
Links of Next Finance Topics:-
- Transfer price
- Test questions responsibility accounting
- Concept of cost of capital
- Capitalization meaning
- Concepts of working capital
- Concept of capital expenditure
- Learning objectives and chapter outline
- Limitations of operations research
- Linear programming learning objectives and outline of chapter