Cost Allocation and Transfer Pricing at Volvo Cars

Requirements:

1. Develop a cost allocation and transfer pricing strategy for Volvo Cars' global production facilities.

Production Facility	Allocation Basis	Transfer Price ($)
Sweden	Direct Labor Hours	60,000
China	Production Cost	50,000

• Implement cost allocation methods to allocate overhead costs across Volvo Cars' manufacturing facilities in Sweden and China.
• Determine transfer pricing mechanisms for intercompany transactions between Volvo Cars' production divisions and regional subsidiaries.
• Recommend Volvo Cars' transfer pricing policies to optimize tax efficiency and profitability across its global operations.