Transfer Pricing and Methods to fix Transfer Pricing

Amount charged for sale of products or for services rendered is called a price. Pricing is either external or internal. Pricing for goods sold / services rendered outside the business is called ‘External pricing’. When a transfer of goods or services takes place within the business (i.e. from one unit of the business to the […]

Fundamentals of Management Accountancy

Management Accounting refers to accounting information that can help managers in a) Control of operations b) Planning c) Decision Making To appreciate the importance of Management Accountancy we need to understand its evolution which may be traced as follows: Cost Expenditure incurred to manufacture a product or provide a service. Responsibility Centers Responsibility Centers are […]

Management Accountancy – An Introduction

Management Accounting helps managers in answering many important questions which may not be answered by using Financial Accounting information. A few examples of such questions / problems are below A farmer has piece of land on which he can grow six varieties of tomatoes. He needs to decide within the limited available land which variety […]

Overhead Cost Allocation

Costs incurred by cost centers are classified into two types a) Direct Costs b) Indirect Costs Costs which can be traced to the finished products manufactured are called ‘direct costs’. In other words a relationship between costs and finished products manufactured can be established. Costs which cannot be traced to the finished products manufactured are […]

Product Costing – Methods

One of the primary areas of management accounting is computing the cost of products manufactured / services provided. The following are two broad methods used for product cost computation: a) Job Costing b) Process Costing Job costing is used in industries which make products for customer specific orders. Each job is separate and independent with […]