Abstract
When Teva Pharmaceutical Industries Ltd. decided to enter the international generic drug market in the mid-1980s, its managers wanted to introduce a transfer pricing system, which they hoped would enhance profit consciousness and improve coordination between operations and marketing. In 1989, Teva's senior management decided to begin implementing activity-based costing (ABC). The structure of Teva's early retrospective ABC models and the current prospective model recognizes the ABC hierarchy of unit, batch, product sustaining, and plant-level costs. The company's ABC method of transfer pricing is described. Also discussed are the ongoing benefits of this system.
| Original language | English |
|---|---|
| Pages (from-to) | 20-28 |
| Number of pages | 9 |
| Journal | Management Accounting |
| Volume | 78 |
| Issue number | 11 |
| State | Published - 1997 |
| Externally published | Yes |
Keywords
- Business And Economics--Accounting
- Case studies
- Advantages
- Marketing
- Costs
- Product mixes
- Market prices
- Multinational corporations
- Pharmaceutical industry
- Product lines
- Transfer pricing
- Activity based costing
- Production capacity
- Corporate profits
- Inventory
- Profitability
- Israel
- 9510:Multinational corporations
- 4120:Accounting policies & procedures
- 9178:Middle East
- 8641:Pharmaceuticals industry
- 9110:Company specific/case studies
- 32541:Pharmaceutical and Medicine Manufacturing
