Suppose a firm allocates costs to its individual product lines using labor cost as the allocation basis. Further assume that each product line’s manager is evaluated based on the line’s reported...

Suppose a firm allocates costs to its individual product lines using labor cost as the allocation basis. Further assume that each product line’s manager is evaluated based on the line’s reported profit. How might this allocation affect a manager’s short-term decision to make or buy individual components?



May 26, 2022
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