Why do managers care about the costs allocated to their individual departments?

Question

Quizplus · Accepted Answer

Managers care about the costs allocated to their individual departments for multiple reasons. First, their performance evaluations frequently depend on their unit's performance more than overall firm performance. Second, the cost allocated is an integral part of the department's reported profit. Third, carefully chosen allocation methods can induce desired behavior. Fourth, carefully chosen allocation methods can dissuade undesired behavior. Therefore, all of the above are reasons managers care about the costs allocated to their individual departments.

Why Do Managers Care About the Costs Allocated to Their