A negotiated transfer price
A)is one that is bargained for between the managers of the buying and selling divisions.
B)would not be based on a product market price that has been reduced through bargaining by division managers.
C)could never be used in an agreement based on standard costs and a profit margin.
D)is usually developed by lawyers following defined legal procedures.

Question

Quizplus · Accepted Answer

A negotiated transfer price is one that is mutually agreed upon through bargaining between the managers of the buying and selling divisions. It may or may not be based on a product market price, and it could be used in an agreement based on standard costs and profit margin. While lawyers may be involved in developing a transfer pricing agreement, they typically do not determine the transfer price itself.

A Negotiated Transfer Price