NOT allocating some corporate costs to divisions and products results in which of the following?
A) an increase in overall corporate profitability
B) the sum of individual product profitability being less than overall company profitability
C) the sum of individual product profitability being greater than overall company profitability
D) a decrease in overall corporate profitability

Question

Quizplus · Accepted Answer

When corporate costs are not allocated to divisions and products, the profitability of individual products appears higher because these costs are not deducted from their revenues. This results in the sum of individual product profitability being greater than the overall company profitability, where corporate costs are considered.

NOT Allocating Some Corporate Costs to Divisions and Products Results