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negotiated transfer prices


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*Transfer prices set by negotiation between the supplying and receiving divisions of an organization. Negotiated transfer prices are appropriate when there is an imperfect market for the goods and services that are bought and sold between divisions. Negotiation may be seen as a way of reducing conflicts between managers. The relative bargaining power of the divisions is important; a mediator may be used to help the negotiations.

Subjects: Accounting.


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