Which of the Following Is a Disadvantage of Using Negotiated

question 99

Multiple Choice

Which of the following is a disadvantage of using negotiated transfer price?

• A) It requires each division manager to put forth effort to increase division operating income.
• B) Negotiated transfer prices take away the divisional autonomy as prices depend on bargaining strength.
• C) Negotiations usually require much time and energy thereby consuming precious managerial time.
• D) It may lead to divisional enmity because negotiation process may cause frictions among departments.

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Definitions:

Demand For Labor

The total amount of workers that employers are willing and able to hire at a given wage rate, in a given period.

Union Shop

A workplace where employees are not required to join the union in order to be hired but must join soon after they begin employment.

Negotiates

The process of discussing something to reach an agreement, especially in business or diplomacy.

Nonunionized Labor Market

A nonunionized labor market is one where labor force participation is not governed by labor unions, which can influence wage levels, working conditions, and job security.