Which of the following is a legitimate disadvantage of negotiated transfer pricing?

Question

Quizplus · Accepted Answer

Negotiated transfer pricing may lead to some less than optimal decisions as the outcome is highly dependent on the negotiation skills of the parties involved. It can also lead to conflicts between divisions and may be less transparent compared to market-based transfer pricing. However, options A, B, and C are not legitimate disadvantages of negotiated transfer pricing. Autonomy can still be maintained through negotiation, negotiated prices may be lower or higher than market prices depending on the bargaining power of the parties involved, and sellers can still cover their variable costs through negotiation.

Which of the Following Is a Legitimate Disadvantage of Negotiated