Individual Assignment #2 Version A

Individual Assignment #2 Version A - have division revenues...

Info iconThis preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
Chris Graflage Individual Homework Assignment #2 Version A #1) Hubley should allocate corporate costs to the divisions to provide information  for economic decisions such as adding or subtracting a divison. Also they should  do this to motivate managers and other employees. This will encourage them to  come up with ways to develop less costly services. #4) Multiple Cost pools is advantageous because some of the corporate costs do  not have a cause effect relationship with division revenues as the allocation base  making it unfair for some divisons. For example it would not make much sense to 
Background image of page 1
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: have division revenues be the allocation base when the amount of interest each divison incurs is actually based on the assets they own. The multiple cost pools spreads the costs based on cost drivers that best demonstrate the cause-and-effect relationship between each activity and the costs in the related cost pool. The incremental operating income is positive for each divison except for the Eastern one (though it still is the most profitable) thus more beneficial then the single cost pool....
View Full Document

Ask a homework question - tutors are online