Back in Chapter 1, I talked about the need to know the cost of things. How we go about that is not overly important as long as we have a consistent approach that is relevant for our organization. Accuracy is not a key factor either. We just need to make sure that we understand the cost of making a product or service available to each of our customers, both external and internal, accurate to within 5% or 10%, and we should be on the right track to avoid transfer pricing conflicts. What is essential though is that we properly understand the cost of the item being transferred, for if we don’t, we shall make the wrong decisions, which in the regulated transfer pricing arena could prove to be costly.

Understanding our costs is becoming ...

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