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The Role Of Internal Assignment Prices In The Evaluation Of The Transactions Between Profit Centers


  • Dorina Budugan

    () (Alexandru Ioan Cuza University of Iasi, Faculty of Economics and Business Administration Iasi, Romania)

  • Iuliana Georgescu

    () (1 December 1918 University of Alba Iulia, Faculty of Science, Alba Iulia, Romania)


The internal assignment price, also called transfer price, represents the value at which the trans-fers between profit centers within the same economic entity are assessed. These transfers are determined by the organizational and functional structure of the economic entity. The internal the in-ternal exchanges between the responsibility (profit) centers of the entity must be evaluated at the assignment price. Moreover, the performances of these centers are influenced by the existence of in-ternal assignments, and the explanation lies in the fact that what the “buying” center considers a cost will become an income for the “selling” center. Despite all these, the internal assignment price does not influence the general income of the economic entity, but only the analytical income of each re-sponsibility center.`The problem of the internal assignment price was scientifically approached in 1920 by General Motors, followed by other companies in the USA (1930s, 1940s) and then by France, starting with 1950.

Suggested Citation

  • Dorina Budugan & Iuliana Georgescu, 2010. "The Role Of Internal Assignment Prices In The Evaluation Of The Transactions Between Profit Centers," Analele Stiintifice ale Universitatii "Alexandru Ioan Cuza" din Iasi - Stiinte Economice, Alexandru Ioan Cuza University, Faculty of Economics and Business Administration, vol. 2010, pages 15-24, july.
  • Handle: RePEc:aic:journl:y:2010:v:se:p:15-24

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    More about this item


    price; transfers; performances; income.;

    JEL classification:

    • H11 - Public Economics - - Structure and Scope of Government - - - Structure and Scope of Government
    • P22 - Economic Systems - - Socialist Systems and Transition Economies - - - Prices
    • P44 - Economic Systems - - Other Economic Systems - - - National Income, Product, and Expenditure; Money; Inflation


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