Transfer price

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Jayati

Jayati (Querist)
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01 May 2014 can anyone give me a brief idea about transfer price and opportunity cost.

Nikhil Kaushik

Nikhil Kaushik (Expert)
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01 May 2014 transfer price has many connotations. a simpler one i, "it is the price at which a product or service is transferred" The transfer can be within an organization - from one department to another. (this is relevant from costing perspective), or it can be between associated (related party) organizations - this is relevant from income tax perspective, or it can be between independent organizations, which is nothing but the sale price.

with regards to opportunity cost - it refers to the cost of next best opportunity available that is foregone when you pick another option. For eg: if cost of samosa is Rs 10 and cost of bread-jam is Rs 8. In this case if you decide to eat samosa, cost of bread jam is the opportunity cost.

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