What might explain why some managers advocate fully allocating all costs, including corporate costs to distribution channels and to customers?
A) all costs are incurred to support sales of products to customers
B) division managers can influence and control corporate costs
C) distribution channel managers can control corporate costs
D) all costs need to be considered to conduct adequate variance analysis

Question

Quizplus · Accepted Answer

Advocating for fully allocating all costs, including corporate costs, to distribution channels and customers likely refers to the belief that all costs are necessary and incurred to support sales of products to customers. Under this approach, all costs are viewed as contributing to the final product, so they should be allocated to the customer.

(Note: Options B and C are unlikely to be reasons for advocating full cost allocation, as they do not relate to the logic behind the decision. Option D is plausible, but Option A is a more direct explanation.)

What Might Explain Why Some Managers Advocate Fully Allocating All