A negotiated transfer pricing system is set up where

Practice Question 3 options:

a)a ready market price is not available and the two sides must come up with an agreeable price

b)the two sides agree to use a cost basis for transfer pricing

c)the buyer buys at variable cost and the seller only sells at full cost

d)the two sides cannot agree on a price and the difference between the two sides is absorbed by the home office

e)none of the options are correct