First, there always seemed to be a few disputes over transfer prices of parts sold by the product divisions to the AfterMarket division, whenever possible, by corporate policy, internal sales of parts were made at original equipment manufacturers market prices.
If a part had been sold an original equipment manufacturers part several years earlier, the original original equipment manufacturers market price was adjusted upward for inflation Arrive at the sales price to the AfterMarket division.
This procedure caused virtually no disputes.
Problem occurred when the part being transferred was strictly an AfterMarket division part.
That is, it was a part never sold by Abrams the original equipment manufacturers market and for which there neither a current original equipment manufacturers outside market price nor a former original equipment manufacturers market price that could be adjusted for inflation.
Usually, such transfer price issues were resolved by the Iwo divisions involved, but occasionally the vice president of finance was asked to arbitrate a dispute
original equipment manufacturers
AfterMarket