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Cost Accounting and Transfer Price

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What are the two types of pricing environments for sales to external parties?

What is a transfer price? Why is determining a fair transfer price important to division managers?

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Solution Summary

This in-depth solution discusses the economic model and cost model in terms of pricing environments for sales to external parties, it also defines and explains how a fair transfer price is calculated and why it is important to division managers. Important formulas and real-life examples are included.

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