Which of the Following Is Not True About Cost Allocation

question 4

Multiple Choice

Which of the following is not true about cost allocation?

• A)Insulating allocations cause one manager's performance to be distorted by another manager's performance.
• B)When a noninsulating allocation base is used to allocate common costs,the allocation base will not fluctuate with other subunits' performance.
• C)Noninsulating cost allocations can reduce the risk managers bear.
• D)Whenever interaction is unimportant,common costs should be allocated using a base that does not insulate subunits.
• E)If the marginal cost of a common resource is less than the resource's reported average cost,common costs should be allocated using a noninsulating allocation base.

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Definitions:

Spinal Cord

A long, thin, tubular bundle of nervous tissue and support cells that extends from the brainstem down the back, central to the body's nervous system.

Brain Stem

The central trunk of the mammalian brain, connecting the brain to the spinal cord and supporting basic life functions.

Limbic System

A complex system of nerves and networks in the brain, involved with instinct and mood control.

Autonomic Nervous System

A part of the peripheral nervous system that controls involuntary bodily functions, including heart rate, digestion, and respiratory rate.