An effective transfer pricing system in the context of a divisional organization has to satisfy several basic criteria. The challenge is presently no transfer pricing system has been perfect. However, for an effective system of transfer pricing, some of the basic criteria need to be satisfied:

it should encourage divisional managers to actin the best […]

In this Part 5, we look at two other pricing methodologies which are as follows:

Break-Even Pricing:

For this type of pricing, the price at which the products will break-even is used. This break-even price will then be added a profit mark up.

Simple […]

In earlier Part 2& Part 3 we have covered cost plus pricing & Variable/Marginal Cost Plus Pricing respectively, in this article we look at the Rate Of Return Pricing Metholodgy:

Rate Of Return Pricing:

For this type of pricing, the company needs to specify the rate of return on […]

In earlier Part 2, we discussed the Cost Plus Pricing Methodology, here in this article, we look at the variable or marginal cost plus pricing.

Using the variable or marginal cost plus pricing methodology:-

The selling price is determined by adding a mark up or margin on the total variable […]

In the earlier article, we discussed pertaining to the factors which affect pricing and the pricing objectives in relation to the business objective.

This article deals with the various pricing methodology, a businessman/entrepreneur can refer to when pricing a product:

FULL COST PLUS PRICING METHODOLOGY:

Full Cost Plus Pricing:

Traditional method […]