Group 21
East and West Division
Standard Pricing + Admin Fee
What price do we set?
Domestic Transfers = Full Standard Cost
Foreign Transfers = Comparable Uncontrolled Price Method (Arm's Length Market Price Method)
All units responsible for transaction currency exposure
Price at which divisions of a company charge and transact between each other
Methods:
Agreement (Negotiations)
Two Step Pricing
Profit Sharing
Organizations that control operations in more than one country (Foreign)
Accounted as Profit Center
Problems:
Cultural Differences
Transfer Pricing
Exchange Rates
Has anyone worked in a multinational organization and faced any issues due to the multinational nature of the firm?
Taxation
Government Regulations
Tariffs
Foreign Exchange Control
Funds Accumulation
Joint Venture
Transfer Price Methods
Comparable Uncontrolled Price Method
Transfer Price
= Price paid in comparable uncontrolled sales ± Adjustments
Resale Price Method
Transfer Price
= Applicable resale price – Appropriate Markup ± Adjustments
Cost-Plus Method
Transfer Price
= Cost + Appropriate Markup ± Adjustments
Price of one currency in terms of another