In the example of Kendra's company, a transfer price would be used to price the motor parts shipped from the Thailand plant to the Indonesia plant.
The transfer price is the price that is used for the transfer of goods or services between two subsidiaries of the same company. The transfer price should reflect the cost of the production and shipping of the motor parts as well as a reasonable profit for the company.
The transfer price should be based on the market conditions of the two countries and should not be set too high, as this could lead to a loss of profits for the company. For example, if the cost of production and shipping of the motor parts is higher in Thailand than in Indonesia, the transfer price should be set higher to reflect this difference. The transfer price should also take into account any taxes or tariffs that would be incurred on the transfer of the goods.
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