Involves Inter transactions of goods/services between divisions
from same organizations. Need to determine what price to charge
for goods transfer between the divisions
Selling division
Involves selling/supplying division
& buying/receiving division
Buying division
1
2
3
(full cost price)
External Sales
(Wed Cakes $100)
External Purchase /Sales
(Plain fruit Cakes
$30)
DIV A
(SELLING)
4
Internal
Transfer
(plain fruit
cakes
DIV B
(BUYING)
5
(OPPORTUNITY COST BASED APPROACH)
6
7
8