Answered: “Once a company allocates corporate…

“Once a company allocates corporate costs to divisions, these costs should not be reallocated to the indirect-cost pools of the division.” Do you agree? Explain.

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter10: Evaluating Decentralized Operations

Section: Chapter Questions

Problem 5DQ: In a decentralized company in which the divisions are organized as investment centers, how could a...

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Concept explainers

Overheads

In cost accounting, overhead refers to those expenses which occur during the operating of a business. Overhead includes the fixed, variable, or semi-variable which is not directly involved with a company product or service. It is very important to analyze overhead expense as it helps the company in determining how much a company must charge for its products and services so that they can generate profit. Overhead expenses depend upon the nature of the business operations.

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“Once a company allocates corporate costs to divisions, these costs should not be reallocated to the indirect-cost pools of the division.” Do you agree? Explain.

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