Cost Allocation of Shared Facilities Cost Is Intended to Remind

question 33

Multiple Choice

Cost allocation of shared facilities cost is intended to remind managers of:

• A)The cost of using a shared resource.
• B)Both the cost and value of using shared resources.
• C)How much capacity a firm has.
• D)Why the firm invests in these facilities.
• E)How dependent the managers are for these facilities.

---

Definitions:

Unsystematic Risk

The risk associated with a specific company or industry, which can be mitigated through diversification.

Beta Coefficient

A measure of a stock's volatility in relation to the overall market; a beta greater than 1 indicates higher than market volatility.

Systematic Risk

The inherent risk that affects the entire market or economy, and cannot be avoided through diversification.

Unsystematic Risk

The danger linked to a particular business or sector, which can be lessened by spreading investments across different areas.