One Disadvantage of Using the Actual Cost of a Product

question 8

True/False

One disadvantage of using the actual cost of a product as the transfer price is that it does not provide a strong incentive for the producing division to control its costs.

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Definitions:

Moral

Pertaining to principles or rules of right conduct or the distinction between right and wrong; ethical.

Emotional Maturity

The ability to understand, manage, and express one's emotions effectively and appropriately.

Self-Control

The ability to regulate one's emotions, thoughts, and behavior in the face of temptations and impulses.

Mood Swings

Rapid and extreme fluctuations in a person's emotional state.