Building a Transfer Price

Starting at the top of the tree with the organization’s HQ, which is based in the United Kingdom, there are four functional areas that we need to examine: strategic management, knowledge management, financial management, and legal services. Each of these has employees, some expenses, and an asset base that needs to be taken into consideration when determining the amount of management fee that will be passed on to every other unit in the organizational family in the form of a monthly or ­quarterly management fee.

The strategic management function provides advice and support in the establishment of business plans as well as conducting regular performance reviews with each of the member organizations in the organizational ...

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