Chapter 24, Problem 2CMA

Most firms allocate corporate and other support costs to divisions and departments for all of the following reasons except to:

a.    remind profit center managers that earnings must be adequate to cover some share of the indirect costs.

b.    stimulate profit center managers to put pressure on central managers to control service costs.

c.    create competition between divisions and departments and their managers.

d.    fix accountability and evaluate profit centers.