Which of the Following Are True About Cost Allocation

question 16

Multiple Choice

Which of the following are true about cost allocation?

• A)Cost allocation is a form of transfer pricing for indirect costs
• B)Cost allocation is an internal tax on services
• C)Cost allocation distorts choices that managers would make otherwise
• D)Cost allocation should be imposed when marginal cost exceeds average cost of an internal resource
• E)All of the above

---

Definitions:

Cognitive Dissonance

The uneasy feeling that arises in someone when they possess multiple conflicting beliefs, ideas, or values simultaneously.

Foot-In-The-Door

A psychological technique that involves getting a person to agree to a large request by first setting them up by agreeing to a modest request.

Fundamental Attribution Error

The tendency to overestimate personality or dispositional factors and underestimate situational influences when explaining the behavior of others.

Slacking Off

The act of reducing effort or avoiding work altogether.