COMMERCE 2AB3 Chapter Notes - Chapter 9: Root Mean Square, Transfer Pricing, Market Price
15 Mar 2017
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Document Summary
Absorption cost-plus pricing: an approach to pricing that de nes the cost base as the manufacturing cost; it excludes both variable and xed selling and administrative costs. Cost-based transfer price: a transfer price that is based on the costs of the division producing the goods. Market-based transfer price: a transfer price that is based on the actual market prices of products. Makeup: the percentage applied to a product"s cost to determine the product"s selling price. Material loading charge: a charge added to cover the cost of purchasing, receiving, handling, and storing materials, plus any desired pro t margin on the materials themselves. Negotiated transfer price: a transfer price that is determine by the agreement of the division mangers when no external market price is available. Outsourcing: contracting with an external party to provide goods or services rather than performing the work internally.
