RSM422H1 Study Guide - Final Guide: Sundar Pichai, Fluoxetine, Cabinetry
Document Summary
Amount used in account for any transfer of goods and services between responsibility centres. Objectives: are increased. trade-off between company costs and revenues: provide each unit with the relevant information it needs to determine the optimum, measure economic performance of the business units, simple to understand and easy to administer. Induce goal congruent decisions that is, both business unit"s and company"s profits. The ideal situation market price-based transfer price transfer price equals the market price, sometimes it maybe adjusted downwards as reflect savings accrued page 232. Cost-based transfer price transfer price is set based on cost plus profit. Two step pricing first, a standard variable cost is charged for each unit. Example: 5000 units for each and ,000 fixed cost + ,000 profit. If 4000 units, transfer price = = ,000 or . 5 per unit. charge for is made that is equal to the fixed costs associated with the facilities reserved for.
