A primary characteristic of a negotiated transfer price is that it:

Multiple Choice

• Takes away the ultimate responsibility of the resulting transfer price from the two parties.

• Can be costly and time-consuming to implement.

• Provides performance indicators that are independent of the negotiating skills of divisional managers.

• Generally results in transferring more than the optimum number of units between the buying and selling divisions of the organization.

• Decreases sub-unit (i.e., divisional) autonomy.