Question Details

The MOST likely reason for NOT allocating corporate costs 



1.	Which cost-allocation criterion is MOST likely to subsidize poor performers at the expense of the best performers?
	a.	The fairness or equity criterion
	b.	The benefits-received criterion
	c.	The ability to bear criterion
	d.	The cause-and-effect criterion

		

2.	A challenge to using cost-benefit criteria for allocating costs is that
	a.	the costs of designing and implementing complex cost allocations are not readily apparent.
	b.	the benefits of making better-informed pricing decisions are difficult to measure.
	c.	cost systems are being simplified and fewer multiple cost-allocation bases are being used.
	d.	the costs of collecting and processing information keep spiraling upward.

		

3.	Corporate overhead costs can be allocated
	a.	using a single cost pool.
	b.	to divisions using one cost pool and then reallocating costs to products using multiple cost pools.
	c.	using numerous individual corporate cost pools.
	d.	using any of the above methods.

		

4.	The MOST likely reason for allocating all corporate costs to divisions include that
	a.	division managers make decisions that ultimately control corporate costs. 
	b.	divisions receive benefits from all corporate costs.
	c.	the hierarchy of costs promotes cost management.
	d.	it is best to use multiple cost objects.

		

5.	The MOST likely reason for NOT allocating corporate costs to divisions include that
	a.	these costs are not controllable by division managers.
	b.	these costs are incurred to support division activities, not corporate activities.
	c.	division resources are already used to attain corporate goals.
	d.	divisions receive no benefits from corporate costs.





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