The Weakness of a Negotiated Transfer Price Is That Cost

question 126

True/False

The weakness of a negotiated transfer price is that cost recovery is guaranteed to the selling division,which may lead to failure to detect inefficient operating conditions and excessive cost incurrence.

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Definitions:

Interest Rate

The cost of borrowing money, expressed as a percentage of the amount borrowed per unit of time.

Current Amount

The present value or total of a particular financial metric, often used in contrast with past or future amounts.

Stock Variable

A variable measured at a specific point in time, representing a quantity that exists or is accumulated, such as a country's debt or a company's inventory.

Labor

The human effort, both physical and mental, used in the production process.