Indirect Costs Should Be Allocated for All of the Following

question 140

Multiple Choice

Indirect costs should be allocated for all of the following reasons except to

• A)motivate managers.
• B)determine the full cost of a product.
• C)motivate general administration.
• D)compare alternatives for decision making.

---

Definitions:

Planning Budget

An estimate of income and expenditure for a set period, often used to guide financial decision-making and control.

Total Cost

The complete cost of production, including both fixed and variable expenses.

Activity Level

Refers to the volume of production or services activities at any given point or period, often influencing costs and revenues.

Planning Budget

A budget created for a specific level of activity; it helps managers plan the expected revenues, costs, and profits for different levels of operational activity.