The Advantage of Allocating Budgeted Rather Than Actual Service Department

question 121

Multiple Choice

The advantage of allocating budgeted rather than actual service department costs is that

• A)managers are not motivated to evaluate the charges.
• B)only one cost pool is necessary.
• C)service departments cannot pass on the costs of inefficiencies and waste.
• D)this practice is acceptable under GAAP.

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Definitions:

Bearer Bonds

Financial securities that are issued as physical certificates and do not record the owner's name, with interest and principal paid to the holder of the certificate.

Transfer Agent

A company or financial institution designated by a corporation to maintain records of investors and account balances, handling issues like stock transfers and dividend payments.

Market Rate Of Interest

The prevailing rate at which interest is paid by borrowers for the use of money that they borrow from lenders.

Maturity Risk

The risk associated with the fixed income instrument reaching its maturity date, affecting the investment's interest rate and return.