Transfer Pricing (No Excess Capacity)

[@basharhuda]

By making this KZbin channel you are now less of a mortal and more of an immortal. This is the best accounting KZbin channel out there. I pay thousands in tuition but no one can teach at your level! I truly appreciate your efforts from the bottom of my heart. May you always succeed and be happy.

[@TaseTea]

I just want to thank you for all the tutorials you do, I'm in accounting and use a lot of your older videos to help with exams. Other channels don't compare to your audio clarity, teaching skills and application of your examples, Thanks!

[@RoshanKumar-hi2wi]

The best video on transfer price I have seen, your way explaining is awsm,,,, Thankyou so much dear for making the videos

[@violavelvette529]

It's interesting to see another method of calculating the minimum acceptable price for sellers with the $5 incremental savings from shipping. You computed $40 SP (external cx. charged) - $5 savings. I did the textbook way: relevant cost (VC of $17, plus incremental cost of transfer, which is $0) + opportunity cost of $40 - $22 = $18 (lost CM) from foregoing external sales = $35. Both makes sense.

[@waqashussain2310]

won't incremental cost be the fixed ?

[@asibabdul8862]

Love your work!! I was looking to see if there are any videos covering ISO vs NSO

[@Lalit_14]

Thank you so much your video is very helpful for me. 😇

[@omercma9262]

amazing work

[@jeshmeetakumar1823]

Great thank you so much

[@Edspira]

You are very welcome

[@sddlee4893]

Why the price is not between $34 to $38? As the full cost is $34.

[@ashvinirao5834]

Thank you thank you 😊

[@marlinehab]

there is a mistake in calculation after 5 dollars saving the incremental cost is 34 not 35 so the range of the transfer price 34 to 38

[@waqashussain2310]

I had a feeling about this too , are you 100% sure that's correct ?

[@ani-mations6787]

@@waqashussain2310 Not quite, I think it's because there is a $1 mark-up between cost of production and the selling price, this is why initially FC+VC = $39, yet SP = $40. With a $5 reduction in VC, that $1 in mark-up is still there to ensure the seat division can make a profit so the minimum transfer price falls to $35 instead of $34. In simple words, at $34, they're breaking even, at $35 they're making a $1 profit! I'm not 100% sure if this is correct but this is my interpretation

[@bobababy]

@@ani-mations6787 my understanding is that, because they currently receive $40, if they sold it for $35 but received a $5 savings in variable costs, they're effectively indifferent between selling externally or internally. If they sold it for $34, they are losing that $1 that they would have earned by selling externally. so I agree with your explanation but this is how I rationalized it