One advantage of using actual cost incurred as the transfer price is that it provides a strong incentive for the producing division to control its costs.

Name: One advantage of using actual cost incurred as the transfer price is that it provides a strong incentive for the producing division to control its costs.
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Question

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Using actual cost incurred as the transfer price does not incentivize the producing division to control costs, as they can pass on any inefficiencies to the buying division.

One Advantage of Using Actual Cost Incurred as the Transfer