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Using the general transfer pricing rule, the maximum transfer price from the buyer division's point of view is calculated as follows: Lesser of: a) internal

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Using the general transfer pricing rule, the maximum transfer price from the buyer division's point of view is calculated as follows: Lesser of: a) internal purchase price; or b) selling price of final product less other costs incurred to finish product Variable cost/unit on external transfer + Total lost contribution margin on external salesumber of units transferred internally Variable cost/unit on internal transfer + Total lost contribution margin on external salesumber of units transferred internally Lesser of: a) external purchase price; or b) selling price of final product less other costs incurred to finish product

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