Question

Profit is an ideal measure of performance of an investment centre as it takes into account...

Profit is an ideal measure of performance of an investment centre as it takes into account the initial investment and size of the division.

True OR false

In divisional performance, the term 'common costs' refers to costs that are common to all divisions and they are apportioned between those divisions.

True or False

Business   Accounting   
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Homework Answers

Answer #1

Solution 1)

Correct Answer : TRUE

Reason : Investment centre takes into account The initial investment and size of the division and profit is the measure of performance of such Investment.

Solution 2)

Correct Answer : FALSE

Reason : Common Cost refers to cost which is not specifically associated with any Division, it is not attributable to any division which means it is not divided amongst the division.

Hope it helps.. In case of any doubts or issues, please do comment below

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