Following Are Reasons to Allocate Support Department Costs

question 86

Multiple Choice

Following are reasons to allocate support department costs:
I. To motivate managers to provide and use support services efficiently
II. For external reporting such as cost reports for government contracts
III. For economic planning and decision-making

• A) I only
• B) II only
• C) III only
• D) I, II, and III

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Definitions:

Bargaining

The process of negotiating the terms of a transaction or agreement between parties with differing interests.

Coase Theorem

An economic theory that suggests that if property rights are well-defined and transaction costs are minimal, voluntary negotiations will lead to the efficient resolution of disputes regarding resource allocation.

Cost Of Bargaining

The expenses, in terms of both time and resources, that are involved in reaching an agreement in a bargaining process.

Property Rights

Legal principles that define the ownership and use of resources, including the ability to transfer, exclude, and derive benefits from them.