If cost is used as a transfer price, the only division with an opportunity to make a profit on the transfer is the division that ______.

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11-08-2022
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If cost is used as a transfer price, the only division with an opportunity to make a profit on the transfer is the division that ______.

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choprayogita110 choprayogita110 · Answer 1 · 2022-08-16T13:20:17+02:00

If cost is used as a transfer price, the only division with an opportunity to make a profit on the transfer is the division that makes the final sale to an outside party.

The price at which related parties interact with one another, like when supplies or labour are traded between departments, is referred to as the transfer price or transfer cost. Transfer pricing in taxation and accounting refers to the guidelines and procedures for valuing transactions inside and between businesses that share ownership or control.

The cost to charge another division or subsidiary for services supplied is determined using a transfer price. Transfer rates are typically calculated based on the going rate for the commodity or service. It is possible to use transfer pricing for royalties, patents, and research.

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