When Companies Become Decentralized and Have Additional Departments, These Departments

Multiple Choice

When companies become decentralized and have additional departments, these departments will often begin to sell their products internally to one another. A crucial step in the process of creating a meaningful and worthwhile business relationship is to establish appropriate transfer prices. Which of the following represents the possible negotiated transfer price?

A) Fixed Manufacturing Costs plus Mark-Up
B) Only Fixed Manufacturing Costs
C) The minimum price as established by the buyer
D) Variable Manufacturing Costs