Which of the Following Companies Is Following a Policy with Respect

question 50

Multiple Choice

Which of the following companies is following a policy with respect to the costs of service departments that is not recommended?

• A) To charge operating departments with the depreciation of forklifts used at its central warehouse, Shalimar Electronics charges predetermined lump-sum amounts calculated on the basis of the long-term average use of the services provided by the warehouse to the various segments.
• B) Manhattan Electronics uses the sales revenue of its various divisions to allocate costs connected with the upkeep of its headquarters building.
• C) Rainier Industrial does not allow its service departments to pass on the costs of their inefficiencies to the operating departments.
• D) Golkonda Refinery separately allocates fixed and variable costs incurred by its service departments to its operating departments.

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Definitions:

Cross-Classification Table

A cross-classification table displays the frequency distribution of variables in a table format, facilitating the analysis of the relationship between two or more categorical variables.

Cross-Classification Table

A table used to display the frequency distribution among variables, showing how many times each combination of variable categories occurs.

Relative Frequencies

The proportion of times that a certain event occurs relative to the total number of outcomes.

Cross-Classification Table

A table that displays the frequency distribution of two or more categorical variables.