Which One of the Following Firms Is Likely to Experience

question 23

Multiple Choice

Which one of the following firms is likely to experience dysfunctional motivation on the part of its managers due to its allocation methods? (CMA adapted)

• A)To allocate depreciation of forklifts used by workers at its central warehouse,Shahlimar Electronics uses predetermined amounts calculated on the basis of the long term average use of the services provided by the warehouse to the various segments.
• B)Manhattan Electronics uses the sales revenue of its various divisions to allocate costs connected with the upkeep of its headquarters building.It also uses ROI to evaluate the divisional performance.
• C)Rainier Industrial does not allow its service departments to pass on their cost overruns to production departments.
• D)Tashkent Auto's management information system (MIS)is operated out of headquarters and serves its various divisions.Tashkent's allocation of MIS-related costs to its divisions is limited to costs the divisions will incur if they were to outsource their MIS needs.
• E)Golkonda Refineries separately allocates fixed and variable costs incurred by its service departments to its production departments.

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Definitions:

Swahili

A Bantu language widely used as a lingua franca in East Africa and having official status in Kenya, Tanzania, and Uganda.

Royal Authority

The power or right governing a monarchy, derived from a sovereign ruler such as a king or queen, with authority often considered divinely ordained or established by tradition.

Kingdom of Benin

A pre-colonial African empire located in what is now Nigeria, renowned for its art, especially its bronze sculptures.

Copper Plaques

Metal pieces often used for commemorative, artistic, or informative purposes.