Which of the Following Is Not True About Cost Allocation

Multiple Choice

Which of the following is not true about cost allocation?

A) Insulating allocations cause one manager's performance to be distorted by another manager's performance.
B) When a noninsulating allocation base is used to allocate common costs,the allocation base will not fluctuate with other subunits' performance.
C) Noninsulating cost allocations can reduce the risk managers bear.
D) Whenever interaction is unimportant,common costs should be allocated using a base that does not insulate subunits.
E) If the marginal cost of a common resource is less than the resource's reported average cost,common costs should be allocated using a noninsulating allocation base.