C.v.p analysis 2
Allocation of costs to various cost objectsQuestion 1 options1)m.pdf
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Allocation of costs to various cost objects: Question 1 options:1)may affect managers\' performance evaluation.2)may affect the overall profitability of a company.3)may affect the apparent profitability of the various products a company makes.4)Both may affect managers\' performance evaluation and may affect the apparent profitability of the various products a company makes are correct. Solution Allocation of costs to various cost objects affetcts both performance evaluation of Managers and the apparent profitability of various products a company makes. The total costs are allocated to different products or cost centre or activity types. The overall profitability of the company remain same as the total costs do not change, but based on the allocation rules , different amonuts are allocated to cost objects. Managers are responsible for the departmental budget and depending on the method of allocation of costs to the cost centres under the department , the budget may be adhered to or exceeded. Similarly product profitability depends on the cost allocation made to it or the cost allocation made to the resources or activities consumed by the product. the method of cost allocation affects product profitability in this way. So the statement 4. is the correct one..
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Allocation of costs to various cost objectsQuestion 1 options1)m.pdf
- Allocation of costs to various cost objects: Question 1 options:1)may affect managers' performance evaluation.2)may affect the overall profitability of a company.3)may affect the apparent profitability of the various products a company makes.4)Both may affect managers' performance evaluation and may affect the apparent profitability of the various products a company makes are correct. Solution Allocation of costs to various cost objects affetcts both performance evaluation of Managers and the apparent profitability of various products a company makes. The total costs are allocated to different products or cost centre or activity types. The overall profitability of the company remain same as the total costs do not change, but based on the allocation rules , different amonuts are allocated to cost objects. Managers are responsible for the departmental budget and depending on the method of allocation of costs to the cost centres under the department , the budget may be adhered to or exceeded. Similarly product profitability depends on the cost allocation made to it or the cost allocation made to the resources or activities consumed by the product. the method of cost allocation affects product profitability in this way. So the statement 4. is the correct one.