engleski

The transfer pricing in management decision making process

Appropriate transfer pricing is important to realize comparative advantages of big corporations, since it is a basis for efficient business of certain branches, as well as of the whole corporation. These are the reasons that transfer pricing is the focal point of the management. Namely, the problem of transfer pricing is sometimes arisen when dealing with complex business systems. To be more precise, the problem arises when semi-finished goods that one branch of the corporation sells to the other branch of the same corporation, has to be evaluated. This is because the decisions on the transfer pricing rate, made at lower levels of management is usually opposite to the same decisions made by the top management. This paper will examine the rules for optimal transfer pricing under condition of both absence and existence of the transfer goods and semi-finished goods markets. After that, the basic accountancy techniques for the transfer pricing calculation will be demonstrated. We shall also try to define advantages and disadvantages of certain decisions and to determine the optimal ones.

optimal transfer price, external market, intermediate products, market-based transfer pricing, negotiated transfer pricing, cost-based transfer pricing

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