Cost Allocation and Transfer Pricing at Nestl Requirements: Implement an appropriate cost allocation method to allocate indirect costs among Nestl's various product lines (e.g., beverages,

Cost Allocation and Transfer Pricing at Nestlé

Requirements:

1. Implement an appropriate cost allocation method to allocate indirect costs among Nestlé's various product lines (e.g., beverages, dairy products, snacks).

Product Line	Direct Costs ($)	Indirect Costs ($)
Beverages	6,000,000	2,500,000
Dairy Products	4,000,000	1,800,000
Snacks	5,000,000	2,200,000

2. Determine transfer pricing for internal transactions between Nestlé's manufacturing and distribution divisions.
3. Evaluate the impact of different transfer pricing methods (e.g., market-based, cost-plus) on profitability.
4. Recommend a transfer pricing policy that aligns with corporate strategy and minimizes tax liabilities.