Author Question: When an organization introduces a new product, people do not all begin the adoption process at the ... (Read 59 times)

saraeharris · **on:** Jun 29, 2018

When an organization introduces a new product, people do not all begin the adoption process at the same time, nor do they move through the process at the same speed.

Indicate whether the statement is true or false

Question 2

How can transfer pricing be calculated? Give three alternatives.

cam1229 · **Reply #1 on:** Jun 29, 2018

Answer to Question 1

True

Answer to Question 2

Transfer pricing occurs when one unit in an organization sells a product to another unit. The price is determined by one of the following methods:
Actual full cost: calculated by dividing all fixed and variable expenses for a period into the number of units produced.

Standard full cost: calculated based on what it would cost to produce the goods at full plant capacity.

Cost plus investment: calculated as full cost, plus the cost of a portion of the selling units' assets used for internal needs.

Market-based cost: calculated at the market price less a small discount to reflect the lack of sales effort and other expenses.

The choice of transfer pricing method depends on the company's management strategy and the nature of the units' interactions. An organization must also ensure that transfer pricing is fair to all units involved in the transactions.