The Use of Dual Rates in a Cost Allocation System

question 21

Multiple Choice

The use of dual rates in a cost allocation system assumes that common costs can be:

• A) separated into their fixed and variable components.
• B) traced directly to a specific division or manager.
• C) allocated based on a physical quantities measure.
• D) assigned to an investment responsibility center.

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Definitions:

Confidence Interval

A set of numbers, taken from sample-based statistics, that is probable to contain the estimated value of an unspecified population parameter.

Population Standard Deviation

A measure of the spread or dispersion of a set of data points in a population.

Sampling Error

The discrepancy between a sample statistic and the actual population parameter, which arises purely by chance from random sampling.

Confidence Interval

A variety of numerical values, sourced from sample measurements, that is believed to include the value of a not-yet-known population attribute.