A Cost-Based Transfer Price Should Be Based on Standard Unit

question 77

True/False

A cost-based transfer price should be based on standard unit costs,not actual costs.

---

Definitions:

Performance Measure

A metric or indicator used to gauge the efficiency, effectiveness, or success of an organization's activities.

Manufacturing Capacity

The maximum volume of products that can be produced in a given period under normal working conditions.

Overall Equipment Effectiveness

A measure of manufacturing productivity that combines availability, performance, and quality metrics of equipment.

Machinery

The machines, equipment, and devices that perform various tasks in the manufacturing of goods and provision of services.