Bases for determining transfer prices

Transfer pricing is the setting of the price for goods and services sold between controlled or related legal entities within an enterprise. For example if the subsidiary company sells goods to the parent company the cost of those goods paid by the parent to the subsidiary is the transfer price.



Bases for determining transfer price

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Advantages and disadvantages of internal auditors reporting to audit committee

This is an independent board therefore organizational independence is achiewed

Enforces internal audit recommendation

Disadvantages

Time factor – lack quality time to support the internal audit activity on day to day basis as an Independent reporting facility. Audit committee meets on average four times a year

Their functions are parallel – the audit committee is apart from the main stream … Read the rest

design desk display eyewear

3 limitations of job costing.

Costs stay in the work-in-process account throughout the job. When the job is finally completed, they are transferred to the finished goods account. By using this method, accountants can make sense of complicated jobs that are moving towards the process of completion.

The following are a limitation of job costing

  • It is said that it is too time-consuming and requires detailed record
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Budgetary slacks – meaning.

budgetary slack is the process by which managers seek to obtain the budget targets that can easily be achieved by either understating revenues and/or overstating costs. Some of the ways in which budgetary slacks arise include the following:

  • Managers avoid risky but profitable projects
  • Managers negotiate for lower targets
  • Managers dispute performance assessment reports.
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featurs of job costing

7 features of job costing

Job costing may be defined as a system of costing in which the elements of cost are accumulated separately for each job or work order undertaken by an organization. Industries which manufacture products or render services against specific orders use job costing or job order method of cost accounting. In the job costing system, an order or a unit, lot … Read the rest