What is a primary outcome of effective cost allocation?

Effective cost allocation is critical for providing an accurate view of where resources are being consumed within an organization. One of the primary outcomes of this practice is the enhancement of pricing strategies and profitability analysis. When costs are allocated correctly, managers can better understand the costs associated with specific products, services, or departments. This clarity allows for more informed decision-making regarding pricing, leading to the establishment of prices that accurately reflect the cost of production and the desired profit margins.

With improved pricing strategies, organizations can ensure that their products are competitively priced while still covering costs and contributing to profits. Additionally, a thorough analysis of profitability becomes possible; managers can identify which products or services are most profitable and which may be dragging overall profitability down. As a result, this contributes to better resource allocation decisions and strategic planning, ultimately enhancing the company's financial performance.

In contrast, the other choices do not reflect the outcomes associated with effective cost allocation. Increased employee workload, reduced total sales, and decreased product quality do not contribute positively to the organization’s financial or operational health and are not outcomes that arise from effective cost allocation practices.