A negotiated price is one that
A)Provides the selling division with a normal profit.
B)Provides the buying division with the lowest price available from outside suppliers.
C)Is agreed to by both the buying and selling division.
D)None of these ans choices are correct.

Question

Quizplus · Accepted Answer

A negotiated price is one that is mutually agreed upon by both the buying and selling divisions. It takes into consideration factors such as production costs, market conditions, and internal transfer pricing policies. The price should result in a fair allocation of costs and profits between the two divisions. Options A and B are incorrect because they only consider the interests of one division, whereas a negotiated price should satisfy both divisions. Option D is incorrect because at least one of the choices must be correct.

A Negotiated Price Is One That