Question

which of following pricing methodologies best describes a methodology in which the transfer pricing is computed by adding an appropriate profit markup to the sellers total cost of a product

Answer 1

Transfer Pricing: Material transfer from one Unit to another unit within the group of organization is called transfer pricing. Transfer pricing is calculated on the various methods like cost plus method, Market price method, Cost method and others..

In the given statement product is transferred with Total Cost of a product + Appropriate Profit Markup

It means the product is transferred at cost Plus profit. So in the given case the transfer pricing is used is Cost Plus.

Answer = Cost Plus