Which Purpose of Cost Allocation Is Used to Encourage Sales

question 52

Multiple Choice

Which purpose of cost allocation is used to encourage sales representatives to push high-margin products or services?

• A) to provide information for economic decisions
• B) to motivate managers and other employees
• C) to justify costs or compute reimbursement
• D) to measure income and assets for reporting to external parties

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Definitions:

Master Budget

The master budget is a comprehensive financial planning document that includes all of a company's budgeted financial statements and operating plans for a specific period.

Raw Materials

The basic materials and components used in the production processes of manufacturing goods.

Finished Goods Inventory

The completed products that are ready for sale but have not yet been sold.

Cash Collections

The process of gathering all monies owed to a company by its customers, reflecting inflow of cash.