There Are Several Methods for Allocating Service Department Costs to Production

question 130

Multiple Choice

There are several methods for allocating service department costs to production departments. The method which recognizes service provided by one service department to another but does not recognize reciprocal interdepartmental service is called: (CMA adapted)

• A) Direct method.
• B) Variable method.
• C) Linear method.
• D) Step method.

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Definitions:

Retractable Bond

Bond that may be sold back to the issuer at a prespecified price before maturity.

Debenture

An unsecured loan certificate issued by a company, backed only by the general creditworthiness and reputation of the issuer.

Default Risk

The likelihood that a debtor may not fulfill their debt contract obligations.

Yield Maturity

The term generally refers to the date when a bond or other fixed-income security matures, at which point the issuer is obligated to pay the principal amount back to the bondholders.