Already have an account? Get multiple benefits of using own account!
Login in your account..!
Remember me
Don't have an account? Create your account in less than a minutes,
Forgot password? how can I recover my password now!
Enter right registered email to receive password!
Q. What is Minimum pricing?
The minimum transfer price an internal seller would accept will depend on whether it has spare capacity to utilise or not.
If spare capacity exists the relevant cost and therefore minimum price to a seller would be the variable (marginal) cost of production e.g. extra cost of making and selling one more unit. Variable (marginal) cost would be the only cost considered by a seller because fixed overhead is normally unavoidable and would not change if supply did or did not take place. The variable (marginal) cost represents the absolute bare minimum transfer price to a seller, in circumstances of spare capacity, at this price, the seller would be indifferent but not out of pocket. Marginal costing may also be appropriate when no intermediate market exists for the seller e.g. Seller can only sell to an internal customer and no external customers are available.
If full capacity exists, the seller would have to turn away external customers and business will be lost if further internal supply were to take place. Because of this dilemma the seller would normally want a minimum price at least equal to the external market price it would normally charge when selling to external customers, this is assuming there is no difference in the cost of supplying internal or external customers e.g. differences in packaging, delivery or marketing costs, in which case the price would normally be adjusted.
The minimum transfer price for a seller at full capacity is generally the external market price, if for some reason the seller maybe discontinuing other products to supply internally, then the minimum price would be the variable (marginal) cost of production and the lost contribution from discontinuing other products for internal supply to take place e.g. the variable cost and contribution lost being the opportunity cost.
We know from a great deal of research that when asked to assign probabilities to uncertain states of nature most people give answers that are over-confident when calibrated against
Define Managerial Process of Crafting & Executing Strategy the managerial ins & outs of crafting & executing company strategies. Special thought is given to management's direc
Tangy spices Ltd, the countries’ biggest spices marketer has decided to launch a hostile bid for Italy’s major spice marketer Chilliano. This is a rare case of an Indian company ma
Choose a real life company. This could be an organization from any industry. No two students should select the similar company. It could be the organization you are working in o
Commence the knowledge audit by identifying the knowledge gaps and blockages in the organisation, as follows: a) Consider each of the ten checklist issues listed, and assess fr
how has quantitative analysis changed the current scenario in the management world today?
Ansoff Growth Matrix The Ansoff Growth matrix is a framework that helps firms to decide their product and market growth strategy . Market penetration In market penetration
Q. International aspects to transfer pricing? The following issues can influence international transfer pricing decisions. Exchange rates e.g. fluctuations in global cur
Explain Functional strategy Functional strategy for J plc will be concerned with how the constituent parts of the organisation can effectively deliver the corporate and busin
Strength: Arpanaa is the only vegetarian restaurant that offers good ambience and holistic experience for the people who visit the city. There is a free trip to the temples in
Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!
whatsapp: +91-977-207-8620
Phone: +91-977-207-8620
Email: [email protected]
All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd