Question 56. Some companies only allocate corporate costs to divisions that

56. Some companies only allocate corporate costs to divisions that

a. are planned and under the control of division managers.

b. are output unit-level costs.

c. are perceived as causally related to division activities.

d. are direct costs.

57. Not allocating some corporate costs to divisions and products results in

a. an increase in overall corporate profitability.

b. the sum of individual product profitability being less than overall company profitability.

c. the sum of individual product profitability being greater than overall company profitability.

d. a decrease in overall corporate profitability.

58. The greater the degree of homogeneity,

a. the greater the number of needed cost pools.

b. the fewer the number of needed cost pools.

c. the less accurate the costs of a particular cost object.

d. the greater the variety of cause-and-effect relationships with the cost driver.

59. When individual activities within a cost pool have a similar relationship with the cost driver, those costs

a. need to be reallocated.

b. need multiple cost drivers.

c. are considered a homogeneous cost pool.

d. are considered an allocated cost pool.

60. Homogeneous cost pools lead to

a. more accurate costs of a given cost object.

b. more resources being assigned to that cost object.

c. the need for more cost drivers.

d. both (a) and (c).

61. Identifying homogeneous cost pools

a. requires judgment and should be reevaluated on a regular basis.

b. should include the input of management.

c. should include a cost-benefit analysis.

d. should include all of the above.

62. To allocate corporate costs to divisions, the allocation base used should

a. be an output unit-level base.

b. have the best cause-and-effect relationship with the costs.

c. combine administrative costs and human resource management costs.

d. allocate the full costs.

63. Corporate administrative costs allocated to a division cost pool are MOST likely

a. output unit-level costs.

b. facility-sustaining costs.

c. product-sustaining costs.

d. batch-level costs.

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