Which of the following is a disadvantage of using negotiated transfer price?
A) It requires each division manager to put forth effort to increase division operating income.
B) Negotiated transfer prices take away the divisional autonomy as prices depend on bargaining strength.
C) Negotiations usually require much time and energy thereby consuming precious managerial time.
D) It may lead to divisional enmity because negotiation process may cause frictions among departments.

Question

Quizplus · Accepted Answer

Negotiated transfer prices can consume significant managerial time and energy, as they require negotiations between divisions, which can be time-consuming and complex.

Which of the Following Is a Disadvantage of Using Negotiated