The market price is the most appropriate transfer price to be charged by one department to another in the same organization for a service provided when:
A.
There is an external market for that service.
B.
The selling department operates at 50 percent of its capacity.
C.
The purchasing department has more negotiating power than the selling department.
When there is an external market to service, it means the selling department could sell to the market at that price. If it sells to the purchasing department at a lower price, it is not maximizing its revenue.
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dnsl18
2 years, 8 months agoIshaku
1 year, 11 months agoJohn1237
11 months, 2 weeks ago