A transfer price can be based on a market price for products that has been reduced in the process of bargaining by division managers.

Question

Quizplus · Accepted Answer

It is possible for transfer prices to be based on market prices that have been reduced through bargaining among division managers. This is known as negotiated transfer pricing, where the division managers agree on a price for the transfer of goods or services between their departments. However, transfer prices can also be based on other factors such as cost-based or cost-plus pricing.

A Transfer Price Can Be Based on a Market Price