From the course: Accounting Foundations: Cost-Based Pricing Strategies

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Case study: Introduction to the transfer pricing controversy

Case study: Introduction to the transfer pricing controversy

From the course: Accounting Foundations: Cost-Based Pricing Strategies

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Case study: Introduction to the transfer pricing controversy

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- Madeline Print Products is a subsidiary of Sophie Systems. Sophie Systems is a multinational information systems consulting firm. Madeline has traditionally provided all of the promotional pamphlets, bound reports and professional presentation materials used by all of the divisions within Sophie Systems. For the past three months, designers with Madeline Print Products have been working with consultants from Harold Consulting, another division of Sophie Systems. This team has been working to design promotional materials that Harold Consulting will distribute to past and potential clients. The designers for Madeline Print Products have worked a total of 1,000 person-hours on this design task. Harold Consulting has reimbursed Madeline Print Products on a cost plus basis. The $30,000 labor cost of the designers, that's 1,000 hours times $30 per hour plus a small profit markup of 10% for a total reimbursement of $33,000.…

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