The Reciprocal Allocation Method Is the Most Precise Yet Infrequently

question 9

Multiple Choice

The reciprocal allocation method is the most precise yet infrequently used.Which of the following is not true?

• A)The reciprocal method requires the significant computing power of large computers to solve simultaneous equations,thus putting it out of reach of most companies.
• B)The reciprocal method appears as a "black box" to managers,thus making managers responsible for costs they may not know how to compute or understand.
• C)Employed carefully,the step-down method can produce results very similar to those produced by the reciprocal method.
• D)Cost allocations are used primarily for decision control and financial reporting rather than for decision making.
• E)Few accountants were trained in solving systems of equations and how to formulate the problem.

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Definitions:

Rational Model

A decision-making framework assuming the best possible outcome through logical and structured steps.

Emotion

A complex psychological state that involves a subjective experience, a physiological response, and a behavioral or expressive response.

Z Problem-solving Model

A decision-making process that alternates between analytical and intuitive thinking to find solutions.

Feeling

Making decisions in a personal, value-oriented way.