In Determining the Amount of Indirect Costs to Be Allocated

question 13

Multiple Choice

In determining the amount of indirect costs to be allocated to the cost object the first step is:

• A) to develop a cost allocation formula
• B) to develop a predetermined cost rate
• C) to select a cost driver
• D) to decide on the number of cost pools

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Definitions:

Performance Decrement

A cost resulting from poor quality or low quantity of production, grievances, and unscheduled machine downtime and repair.

Compensation Awards

Payments or benefits given to employees or individuals as recognition for their work, achievements, or to cover costs incurred from injuries or losses.

Compensation Awards

Financial or non-financial rewards given to employees in recognition of their work performance, contributions, or achievements.

Court Awards

Financial compensation or legal judgements granted by a court in response to lawsuits or legal actions.