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Are common costs cost attributed to products units? Will it be a relevant cost when making decision ?
Also, apart from only 2 disadvantages of RI which :
– size of investment and division
– accounting policies of profit and capital employed which can be manipulated to achieved bonus related targetsAre there more disadvantages sir?
I thought common costs were those that were NOT attributable to different products
Off the top of my head I can’t think of any others … I may have been inclined to make 4 separate points out of the two that you have identified:
Size of investment
Different accounting policies used in arriving at the profit figure
Variation in the bases of arriving at a figure for capital employed
Incomparability of size of divisionsOK?
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