Transfer Pricing (with Excess Capacity)

This video discusses transfer pricing when the selling division has excess capacity.

When the selling division has excess capacity, this means it can produce more units than customers outside the firm would be willing to purchase. In such a case, the selling division should be willing to accept any transfer price that is at least as high as its variable cost of producing the excess capacity (the extra units that can't be sold to outside customers).
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Видео Transfer Pricing (with Excess Capacity) канала Edspira