What Is the Primary Advantage of a Negotiated Transfer Price

question 3

Multiple Choice

What is the primary advantage of a negotiated transfer price?

• A) It is objectively determined.
• B) It reflects managers' ability to control cost.
• C) It is based on arms-length transactions with unrelated parties.
• D) It preserves managerial autonomy to make decisions.

---

Definitions:

Profit-Maximizing

A strategy or point at which a business achieves its highest possible profit under given conditions.

Incurring Losses

The state of experiencing a negative financial result, where expenses exceed revenues.

Monopolistically Competitive

A market structure characterized by many sellers offering differentiated products, allowing for elements of competition and some degree of market power for each seller.

Total Revenue

The comprehensive total of cash inflow a business gathers from its selling or service operations during a set time period.