Which cost-allocation criterion is most likely to subsidize poor performers at the expense of the best performers?
A) the fairness or equity criterion
B) the benefits-received criterion
C) the ability to bear criterion
D) the cause-and-effect criterion

Question

Quizplus · Accepted Answer

The ability to bear criterion allocates costs based on the ability of a department or division to absorb those costs, rather than on their actual use or cause of the costs. This can lead to situations where more profitable or efficient departments end up subsidizing less profitable or efficient ones, as they are deemed to have a greater ability to bear the costs.

Which Cost-Allocation Criterion Is Most Likely to Subsidize Poor Performers