In negotiated transfer pricing, the selling division sets the ceiling (maximum possible transfer price) for the bargaining range.

Question

Quizplus · Accepted Answer

In negotiated transfer pricing, both the selling and buying divisions negotiate and agree upon a transfer price within a bargaining range that is determined by each division's cost and market conditions. There is no pre-determined ceiling or floor for the bargaining range in negotiated transfer pricing.

In Negotiated Transfer Pricing, the Selling Division Sets the Ceiling