The Most Likely Result of Using a Negotiated Transfer Price

question 6

Multiple Choice

The most likely result of using a negotiated transfer price is that:

• A) The resulting decision reflects purely economic considerations.
• B) More than the optimum number of units will be transferred between divisions.
• C) Fewer than the optimum number of units will be transferred between divisions.
• D) It takes away from the buying and selling units the ultimate responsibility for determining the transfer price.
• E) The end result might reflect the relative bargaining skills of the negotiating managers.