Which Service Department Cost Allocation Method Assigns Indirect Costs to Cost

question 165

Multiple Choice

Which service department cost allocation method assigns indirect costs to cost objects after considering some of the interrelationships of the cost objects?

• A)step method
• B)indirect method
• C)algebraic method
• D)direct method

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Definitions:

APC

Average Propensity to Consume, the fraction of income that households spend on consumption as opposed to saving.

MPS

An acronym that can stand for multiple financial and economic terms, such as Marginal Propensity to Save, which indicates the fraction of additional income that a household saves.

45-Degree Line

In economics, a line on a graph that shows where the value of the goods and services produced in an economy equals the total income earned in that same economy.

Disposable Income

Income that is available for saving and spending after income taxes have been deducted.