Use the following to answer questions:
The Furniture Express has two divisions: cutting and assembly and finishing. The company makes quality furniture. The costs for its completed tables are:

While the tables usually are transferred to assembly and finishing, there is a market for the unassembled-unfinished tables where they sell for $130 for a complete set of parts for a table. The company expects a 25 percent markup as its minimum profit level.
-If the company uses negotiated pricing to set a transfer price, it should be a
A) Maximum of $130
B) Minimum of $103
C) Maximum of $100
D) Minimum of $95

Question

Use the following to answer questions:
The Furniture Express has two divisions: cutting and assembly and finishing. The company makes quality furniture. The costs for its completed tables are:
  
While the tables usually are transferred to assembly and finishing, there is a market for the unassembled-unfinished tables where they sell for $130 for a complete set of parts for a table. The company expects a 25 percent markup as its minimum profit level.
-If the company uses negotiated pricing to set a transfer price, it should be a
A) Maximum of $130 
B) Minimum of $103 
C) Maximum of $100 
D) Minimum of $95

Quizplus · Accepted Answer

Negotiated pricing involves setting a transfer price within a range that both the buying and selling divisions agree upon. The maximum price would be the market price or the price at which the selling division can sell externally, which is $130.

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