A Major Advantage of Using Actual Costs for Transfer Prices

question 90

True/False

A major advantage of using actual costs for transfer prices is that often inefficiencies are NOT passed along to the receiving division.

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Definitions:

Commercial Insurance

Insurance that covers some type of business risk.

Business Risk

The possibility that a company will have lower than anticipated profits or experience a loss rather than making a profit.

Insurance Agreement

is a contract between an insurance provider and a policyholder, specifying the terms for coverage of specified risks in exchange for premiums.

Policy

The insurance document signed by the insured party and the insurer.