Final answer:
Option (D), The minimum transfer price within a company is established by the selling division to cover costs and potentially include a profit margin. When internal negotiations fail, a neutral third-party arbitrator might step in.
Step-by-step explanation:
In the context of negotiated transfer pricing, a minimum transfer price is typically established by the selling division. This ensures that the selling division covers its costs and possibly includes a margin of profit. The purchasing division would usually seek to negotiate this price down to reduce costs, but the selling division has to ensure it at least covers its variable costs and ideally, the full costs including an allocation of fixed costs as well.
If an agreement cannot be reached internally and both divisions are part of the same company, sometimes a neutral third-party arbitrator might be involved to facilitate a fair price, although this is less common.
Regarding government intervention and regulations, things like minimum resale price maintenance agreements are relevant but pertain to transactions between different legal entities - typically, a manufacturer and its dealers - rather than internal transfer pricing within a single company.
These regulations are in place primarily to prevent anti-competitive practices and ensure market competition. However, when it comes to internal corporate transfer pricing, decisions are usually business strategy-oriented and not subject to such regulatory details.