external price in industry publications from a supplier near Chicago is $200 per ton plus transportation. It costs $20 per ton to transport the goods to Detroit. Chicago’s actual market cost per ton to buy the direct materials to make the transferred product is $100. Actual per-ton direct labor is $50. Other actual costs of storage and handling are $40. The company president selects a $220 transfer price. This is an example of
market-based transfer pricing.
cost-based transfer pricing.
negotiated transfer pricing
cost plus 20% transfer pricing.
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