How Should Management Choose an Acceptable Cost Allocation Method for Accounting

question 55

Essay

How should management choose an acceptable cost allocation method for accounting purposes?

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Definitions:

Delegation

The act of assigning responsibility or authority from one person or group to another.

Creditor Beneficiary

is a third party that benefits from a contract wherein the promisor agrees to pay the promisee's debt to the third party.

Incidental Beneficiary

An incidental beneficiary is a third party who may benefit from a contract between two other parties, even though the benefits were not directly intended for them.

Privity of Contract

The legal principle that a contract confers rights and imposes obligations only on the parties to the contract, barring any third party from enforcing or interfering with the agreement.