Some companies only allocate corporate costs to divisions that are:
A)planned and under the control of division managers
B)output unit-level costs
C)perceived as causally related to division activities
D)direct costs

Question

Quizplus · Accepted Answer

Companies typically allocate corporate costs that are perceived as causally related to division activities. This means that the costs are associated with the activities of the division and can be reasonably attributed to its operations. Allocating corporate costs in this manner allows for a more accurate reflection of the division's profitability and provides useful information for decision-making. Allocating costs that are not related to division activities can distort the division's financial performance and hamper effective decision-making.

Some Companies Only Allocate Corporate Costs to Divisions That Are