Cost Allocation and Transfer Pricing at Procter & Gamble

Requirements:

1. Implement an appropriate cost allocation method to allocate indirect costs among Procter & Gamble's various product lines (e.g., detergents, personal care, and baby products).

Product Line	Direct Costs ($)	Indirect Costs ($)
Detergents	5,000,000	2,000,000
Personal Care	3,000,000	1,500,000
Baby Products	4,000,000	1,800,000

2. Determine transfer pricing for internal transactions between Procter & Gamble'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.