Allocation of corporate-sustaining costs is useful for ________.
A) evaluating the performance of salespersons with individual customer accounts
B) motivating distribution-channel management
C) focusing on the cause-and-effect relationships with the cost-allocation bases
D) motivating division managers to examine how corporate costs are planned and controlled

Question

Quizplus · Accepted Answer

Allocating corporate-sustaining costs can motivate division managers to examine how corporate costs are planned and controlled, as well as encourage them to increase efficiency and effectiveness in their operations to reduce overall corporate-sustaining expenses. This can result in cost-saving benefits for the company as a whole. Allocating costs to individual customer accounts (A) or motivating distribution-channel management (B) may be better suited for other types of cost allocation methods. Focusing on cause-and-effect relationships with cost-allocation bases (C) is important in all types of cost allocation, but it may not be the primary purpose of allocating corporate-sustaining costs.

Allocation of Corporate-Sustaining Costs Is Useful for ________