Which of the following is NOT a reason underlying the importance of allocations for inventory costing and cost of goods sold computations?
A)Inventory costing is essential for proper balance sheet presentation.
B)Divisional profitability may affect compensation for divisional managers.
C)Cost of goods sold is an important component in the determination of net income.
D)The information may be required for insurance settlement or litigation.
E)Sell work-in -process or process further decisions prior to the splitoff point.

Question

Quizplus · Accepted Answer

Choice E is not a reason underlying the importance of allocations for inventory costing and cost of goods sold computations. The other choices all highlight important reasons for accurate cost allocation, including the proper presentation of inventory on the balance sheet, the impact on divisional profitability and compensation, the contribution to the calculation of net income, and the potential need for the information in insurance or litigation scenarios.

Which of the Following Is NOT a Reason Underlying the Importance