Question

A company uses negotiated transfer prices between divisions. All of the following are advantages for this type of transfer pricing model except that negotiated transfer prices A. Achieve goal congruence. B. Are useful for evaluating individual division performance. C. Allow divisions to make their own decisions. D. Are simple and quick to implement.

Answer 1

Answer:

d

Explanation:

Transfer price is the price at which goods and services are exchanged within the departments of a company

negotiated transfer price is the price that is agreed on by the two departments involved in the exchange after negotiation.

Advantages of negotiated transfer prices

1. it maintains the autonomy of the divisions
2. It ensures that the best price is gotten for the transaction and that the transaction is profitable to both parties involved in the transaction

Disadvantages of negotiated transfer prices

it is time consuming