Question Details

When corporate-sustaining costs are fully allocated 




1.	Corporate-sustaining costs 
	a.	are common to all individual customers.
	b.	have a clear cause-and-effect relationship with several cost-allocation bases.
	c.	should be allocated for decisions regarding reducing customer costs.
	d.	apply to all of the above.

		

2.	The allocation of corporate-sustaining costs is useful for
	a.	evaluating the performance of salespersons with individual customer accounts.
	b.	motivating distribution-channel management.
	c.	focusing on the cause-and-effect relationships with the cost-allocation bases.
	d.	none of the above.

		

3.	If deciding whether to eliminate a distribution channel, allocating corporate-sustaining costs to distribution channels
	a.	helps define cost reduction possibilities.
	b.	gives the misleading impression of potential cost savings.
	c.	identifies administrative inefficiencies.
	d.	evaluates the effectiveness of sales personnel.

		

4.	When corporate-sustaining costs are fully allocated to distribution channels then the sum of the distribution-channel operating incomes
	a.	is less than company-wide operating income.
	b.	is equal to company-wide operating income.
	c.	is greater than company-wide operating income.
	d.	cannot be determined.

		
5.	Corporate-sustaining costs should be allocated 
	a.	to motivate changes in customer behavior.
	b.	to evaluate distribution-channel managers.
	c.	to determine the selling price that will cover all costs.
	d.	to identify the most profitable customers.






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