Negotiated Transfer Pricing Is Not Always Used Because of Each

question 27

Multiple Choice

Negotiated transfer pricing is not always used because of each of the following reasons except that

• A) market price information is sometimes not easily obtainable.
• B) a lack of trust between the negotiating divisions may lead to a breakdown in the negotiations.
• C) negotiations often lead to different pricing strategies from division to division.
• D) opportunity cost is sometimes not determinable.

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Definitions:

Real Interest Rate

The inflation-adjusted interest rate, revealing the bona fide cost of obtaining a loan or the genuine interest earned on savings.

Nominal Interest Rate

The interest rate before adjustments for inflation, representing the stated or face interest rate on a loan or investment.

Inflation Rate

The percentage rate at which the general level of prices for goods and services is rising, and subsequently, purchasing power is falling over a specific period of time.

CPI

This index reflects the mean shift in costs over time for a collection of consumer goods and services as experienced by urban buyers.