The Allocation Method for Support Department Costs That Allocates Fixed

question 40

Multiple Choice

The allocation method for support department costs that allocates fixed and variable costs separately is:

• A) the reciprocal method
• B) the step-down method
• C) the dual rate method
• D) the direct method

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Definitions:

Deductions

Expenses or amounts subtracted from gross income to reduce the taxable income.

FICA-OASDI

Refers to the Social Security portion of the Federal Insurance Contributions Act tax, covering both the Old Age, Survivors, and Disability Insurance.

Cumulative Earnings

The total amount of net income an entity has earned over its life, up to the current reporting date, not yet distributed to shareholders.

FICA-Medicare

A federal payroll (or employment) tax contribution towards Medicare, part of the FICA taxes in the United States.