In the Mechanics of Process Costing, Why Is an Allocation

question 5

Multiple Choice

In the mechanics of process costing, why is an allocation that computes costs based on the number of physical units not accurate?

• A)A number based on physical units does not include fixed costs.
• B)A number based on physical units does not include overhead costs.
• C)It attaches too much variable costs to each unit.
• D)It attaches the same value to a unit whether the unit is in process or is complete.
• E)None of the above.

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Definitions:

Ideological

Relating to or based on a system of beliefs, values, or ideas that characterizes a particular culture or group.

Contingent

Reliant on another factor and not guaranteed or definitive.

Mandatory Minimum

A type of criminal sentence determined by law that establishes the minimum length of prison time that must be served for certain offenses.

Punitive Policies

Strategies or laws that are intended to punish individuals or entities for misconduct or crimes.