When Actual Cost-Allocation Rates Are Used, Managers of the Supplier

question 86

True/False

When actual cost-allocation rates are used, managers of the supplier division are motivated to improve efficiency.

---

Definitions:

Consignment-in

Goods held for sale by one party although ownership is retained by another party.

Commissions Earned

Income received by salespersons, brokers, or agents based on sales or transactions completed.

Deferred Gross Profit

The portion of profit resulting from sales made on installment that is not recognized immediately but deferred to future periods.