The Process of First Allocating Costs to Intermediate Cost Pools

question 79

Multiple Choice

The process of first allocating costs to intermediate cost pools and then to the individual cost objects using different allocation bases is a(n) :

• A) continuous flow process.
• B) cost management system.
• C) two-stage allocation system.
• D) operations cost.

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Definitions:

Unit Selling Price

The pricing of individual units of goods or services that a business offers for sale.

Break-even Point

The financial state where total costs equal total revenues, implying that the business is neither making a profit nor a loss.

Operating Income

The profit earned from a company's core business operations, excluding deductions of interest and tax.

Variable Costing

The concept that considers the cost of products manufactured to be composed only of those manufacturing costs that increase or decrease as the volume of production rises or falls (direct materials, direct labor, and variable factory overhead).