To Allocate Corporate Costs to Divisions, the Ideal Situation Would

question 2

Multiple Choice

To allocate corporate costs to divisions, the ideal situation would be for the allocation base to ________.

• A) be an output unit-level base
• B) have the best cause-and-effect relationship with the costs
• C) combine administrative costs and human resource management costs
• D) allocate the fixed costs only

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Definitions:

Porter's Five Forces Model

A framework for analyzing a business's competitive environment, focusing on five key forces that influence its ability to serve customers and turn a profit.

Substitute Products

Products that serve as alternatives to one another in the market, satisfying similar needs or wants of consumers.

Immediate Rivals

Competitors that directly impact a business’s operations or market position, often operating in the same industry and targeting similar customer bases.

Value-Chain Analysis

A strategic analytical tool used for identifying the primary and support activities of a business that add value to its final product and then analyzing these activities to reduce costs or increase differentiation.