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:

Rawlsian

Pertaining to the philosophical ideas of John Rawls, especially his theory of justice which emphasizes fairness and the "veil of ignorance" principle in ethical decision making.

Utilitarian

A philosophical theory that suggests an action is right if it leads to the greatest happiness for the greatest number of people.

Paternalism

The practice or policy of limiting someone's freedom or making decisions for them in their supposed best interest.