Internal Transfer Prices Based On Activities And Their Role In Evaluating The Performance Of Profit Centers

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Alaa Jassim Salman , Eman A.Mmalullah


The aim of the research is to demonstrate the benefit from internal transfer rates in evaluating profitability centers, and to clarify methods for using activities based on activities in determining internal transfer prices in economic units, as well as showing 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 A correct image of the evaluation of profitability centers, and the research problem revolved around whether the use of internal transfer rates based on activities would enhance the performance evaluation of the economic unit in the research sample. Leather Industries (research sample), which is one of the companies affiliated to the Ministry of Industry to evaluate the performance of its profit centers. The research reached a set of conclusions, the most important 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 products of the center due to the identification and analysis of the activities in this center and the diagnosis of those activities that add value and those that do not add value and on it each activity It bears the costs it deserves, which helps to determine a transfer price on the basis of a fair college cost, which helps the managers of profitability centers to take the right decisions and evaluate the performance of these centers due to their adoption of the basis of activities that provides better information for managing costs for those activities. The research came out with a set of recommendations, the most important of which were : (The Iraqi economic units, especially the research sample laboratory, should adopt the appropriate transfer price policy according to 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 manner that contributes to evaluating the performance of those sectors).

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