What Is One of the Potential Disadvantages of NOT Allocating

question 148

Multiple Choice

What is one of the potential disadvantages of NOT allocating support department costs to production departments?

• A)total costs would not be accumulated
• B)managers may tend to overconsume these services
• C)this would encourage managers to monitor support department performance
• D)managers will use a support service at a more efficient level

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Definitions:

Net Income

The total profit or loss of a company after all expenses, including taxes and interest, have been deducted from total revenue.

December

The twelfth and final month of the year in the Gregorian calendar, frequently associated with end-of-year summaries and holiday seasons.

Merchandise Purchases

The total cost of goods bought for resale during an accounting period.

Raw Materials

The basic materials and components required in the manufacturing process to produce finished goods.