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Unable to figure out the calculation behind Transfer Pricing

in Costing 3 comments

Business has a requirement to use "Pricing Strategy" as a Transfer Pricing Rule for internal material transfer [Event Type: Interorganization Shipment]

Can anyone explain the calculation behind the Transfer Price?

Suppose: I created a Transfer order where I am transferring a material from one legal entity (L1) to another legal entity (L2).

Cost of the item in L1 = 100 USD & Price List in the Pricing Strategy has defined as 10 USD

Keep in mind that there is no cost in the destination org. Now please tell me what will be the Transfer Price and Profit in Inventory?

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