Prices Of Internal Transfer Based On Activities And The Role To Evaluate The Profit Centers’ Performance

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Zhang Yanzhi , Liu Wenming , Wang Yanyan , Zhang Suolun


The purpose of the research is to clarify methods for using activities based on activities to determine internal transfer prices in economic units and to show the value of internal transfer rates in evaluating profitability centers. It also aims to show the impact of applying internal transfer rates based on activities in increasing the accuracy of costs and giving more detailed information and its reflection on If the use of internal transfer rates based on activities would improve the performance evaluation of the economic unit in the study sample, then that would be a correct representation of the evaluation of profitability, and that was the research challenge. Among the businesses connected to the Ministry of Industry is Leather Industries (research sample).The study came to a number of conclusions, the most significant of which were: (The application of the ABC system in the small tanning center in the laboratory, the sample of the research provided a fair product cost for the center's products due to the identification and analysis of the center's activities and the diagnosis of those activities that add value and those that do not add value and on it each activity. Due to the managers of profitability centers’ adoption of the basis of activities, it bears the costs it deserves, assisting in the determination of a transfer price based on a fair college cost. As a result, these managers are better able to make informed decisions and assess the performance of these centers.The research produced a number of recommendations, the most crucial of which was that Iraqi economic units, particularly the research sample laboratory, adopt the proper transfer price policy in line with the nature of their activity and products, and use transfer prices as a basis for transferring products to carry out internal transfers between the company's sectors and in a way that contributes to evaluating the performance of those sectors.

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