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The Costing Formula Suitable for Pricing (Transfer Pricing) Decisions and Maximization of Business Value


  • Tomáš Buus


This paper deals with different kinds of costing formulas, regarding the price-setting decisions, resp. transfer-pricing decisions and business value maximization. Results of theoretical research show that it is always suitable to separate fixed and variable costs, nevertheless retrograde costing formula is more convenient in competitive environment, whereas dynamic costing is more suitable in the case of monopoly. While reflecting the above, it is also necessary to take into account the multi-layer nature of product, including servicing and extraordinary requirements of customer (e.g. by using activity-based costing). The main determinant of success is not only the type of costing formula used, but also quality and detail of the data in information system.

Suggested Citation

  • Tomáš Buus, 2009. "The Costing Formula Suitable for Pricing (Transfer Pricing) Decisions and Maximization of Business Value," Český finanční a účetní časopis, University of Economics, Prague, vol. 2009(2), pages 33-45.
  • Handle: RePEc:prg:jnlcfu:v:2009:y:2009:i:2:id:27:p:33-45

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    References listed on IDEAS

    1. stanley c. w. salvary, 2005. "The Accounting Variable And Stock Price Determination," Finance 0502011, University Library of Munich, Germany.
    2. Eddy Cardinaels & Filip Roodhooft & Luk Warlop & Gustaaf Van Herck, 2004. "Market feedback, cost system choice and competitve pricing: the advantage of not being a leader," Vlerick Leuven Gent Management School Working Paper Series 2004-06, Vlerick Leuven Gent Management School.
    3. Costa-Gomes, Miguel & Crawford, Vincent P & Broseta, Bruno, 2001. "Cognition and Behavior in Normal-Form Games: An Experimental Study," Econometrica, Econometric Society, vol. 69(5), pages 1193-1235, September.
    4. Tomáš Buus & Jaroslav BRADA, 2008. "On the Necessity of Using Average Cost as a Base for Transfer Price," European Financial and Accounting Journal, University of Economics, Prague, vol. 2008(3), pages 79-94.
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    More about this item


    Costing; Transfer price; Cognition; Kalkulace; Transferová cena; Kognice;

    JEL classification:

    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • M21 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Economics - - - Business Economics
    • M40 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - General


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