An Organization Establishes a Collateral Structure for All of the Following

question 19

Multiple Choice

An organization establishes a collateral structure for all of the following reasons except:

• A)to establish a formal organization.
• B)to improve decision- making.
• C)to improve the ability to learn.
• D)to adjust to new situations.

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Definitions:

Cost Objects

Items or activities for which costs are measured and assigned, such as products, services, or projects.

Plantwide Overhead Rate

A single rate used to allocate manufacturing overhead costs uniformly across all products within a plant or facility.

Overhead Allocations

The process of distributing indirect costs across various products, services, or departments within a business.

Allocation Base

A criterion or standard used to distribute indirect costs to various cost objects, such as products, services, or departments.