Variances when Transfer Prices Differ between Warehouses

Use of a transfer price allows the sending warehouse to make a "profit" on the transfer of inventory.  For example, if a manufacturing site produces an item for $50 per unit, it may charge $55 for the inventory to other warehouses and make a $5 profit per unit.  Inventory accounting would generate the following journal entries:

If you wish to treat transfers as revenue, you must make a manual entry to the general ledger as follows:

Of course, you would need to make a manual entry for every transfer recorded.  One journal entry at the end of the period would be required, with the transfer sales amount equal to the total intercompany receivables entry and the cost of goods transferred equal to intercompany receivables less transfer price variance.