CAVerse
Sign in
DashboardTake TestAI Tutor🔒Paper Check🔒LevelsConceptsNotesAmendments🔒Secrets 🔐🔒LibraryPlannerStudy DeskFree ResourcesAnalyticsResultsBankPricing
Concept Atlas/SET B

SET B · Core

Transfer Pricing — General Rule

Minimum transfer price = variable cost + opportunity cost forgone.

Formula / Rule

MinTP = VC + (External price − VC) × Capacity utilisation

Memory aid

VC + opportunity. Spare capacity = opportunity is zero, so MinTP = VC.

⚠ Most common mistake

Adding allocated fixed costs to the floor — they're not relevant for the next-unit decision.

Go deeper

Need more than a one-liner? Pick a view — first time generates with AI, after that it’s instant for everyone.

Prerequisites

Make sure you know these first.

  • Marginal Cost & Contribution
    Marginal cost = variable cost of one more unit. Contribution = Selling price − VC.
CAVerse·A product of TwoCoreX (OPC) Pvt Ltd
PricingCA LevelsAI TutorNotesPast PapersBlogFAQContactRefundPrivacyTerms
© 2026