When corporate-sustaining costs are fully allocated to distribution channels, then the sum of the distribution-channel operating incomes is:
A)less than company-wide operating income
B)equal to company-wide operating income
C)greater than company-wide operating income
D)indeterminable

Question

Quizplus · Accepted Answer

When corporate-sustaining costs are fully allocated to distribution channels, it means that all the costs are allocated to each channel and no cost is left unallocated. Therefore, the sum of the distribution-channel operating incomes will be equal to the company-wide operating income.

When Corporate-Sustaining Costs Are Fully Allocated to Distribution Channels, Then