An advantage of a negotiated transfer price of a product to be transferred between divisions is the ________.
A) close relationship between the negotiated price and the market price
B) negotiated transfer price preserves divisional autonomy
C) negotiations usually do not require much time and energy
D) simplicity of its computations and close approximation to market price

Question

Quizplus · Accepted Answer

Negotiated transfer prices preserve divisional autonomy by allowing divisions to negotiate the terms of the transfer, including the price, which respects their independence and decision-making authority within the organization. This autonomy can encourage a sense of ownership and responsibility among divisions, potentially leading to more efficient and effective operations.

An Advantage of a Negotiated Transfer Price of a Product