The direct method of departmental cost allocation ignores:
A)The managers' bias.
B)Accrual accounting.
C)Tax implications.
D)Long-term implications.
E)Reciprocal flows.

Question

Quizplus · Accepted Answer

The direct method of departmental cost allocation does not consider reciprocal flows between departments, where costs and services are exchanged between departments. This can lead to an inaccurate allocation of costs and a distortion of departmental performance. The other options (managers' bias, accrual accounting, tax implications, and long-term implications) are not applicable to the direct method of departmental cost allocation.

The Direct Method of Departmental Cost Allocation Ignores