The Allocation of General Overhead Control Costs to Operating Departments

question 53

Multiple Choice

The allocation of general overhead control costs to operating departments can be least justified in determining

• A)income of a product or functional unit.
• B)costs for making management's decisions.
• C)costs of products sold.
• D)costs for government's "cost-plus" contracts.

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Definitions:

Capital Expenditures

Funds used by a company to acquire or upgrade physical assets such as property, industrial buildings or equipment.

Cash Dividends

Payments made by a corporation to its shareholder members as a distribution of profits.

Operating Expenses

Costs associated with a company's day-to-day operational activities, excluding direct labor, direct materials, and direct expenses.

Prepaid Expenses

Payments made in advance for goods or services to be received in the future.