Why might a firm be strategic in the choice of allocation procedures to determine reimbursable costs?
Answer to relevant QuestionsHow could a firm induce desirable behavior or dissuade undesirable behavior by changing its cost allocation procedures?List three ways in which a company can improve profitability using ABC data.What are the two key principles of performance measurement?Suppose a firm has underapplied overhead at yearend. Also assume the firm writes off this underapplied overhead to COGS. Would the adjustment increase or decrease COGS? What is the effect on net income?Does changing the order in which we allocate the costs of support activities matter under the step down method? Does it matter for the direct or reciprocal methods?
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