Which of the Following Statements Is True Concerning Lump-Sum Allocations

question 141

Multiple Choice

Which of the following statements is true concerning lump-sum allocations of service department costs?

• A) They make fixed costs appear to be variable to the manager receiving the allocation.
• B)They are not affected by the activity level in the department receiving the allocation.
• C)They make fixed costs appear to be variable to the manager receiving the allocation and are not affected by the activity level in the department receiving the allocation.
• D)They do not make fixed costs appear to be variable to the manager receiving the allocation and are affected by the activity level in the department receiving the allocation

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Definitions:

Marginal Costs

The cost of producing one additional unit of a product or service, often used in decision-making and pricing strategies.

Corporate Tax Rates

The rates at which corporations are taxed on their profits by the government.

Capital Structure

The mix of debt and equity financing used by a firm to finance its operations and growth.

Business Risk

The exposure a company or investor has due to uncertainties in the operating environment, including market demand, supply costs, and competition.