Managers Can Improve the Quality of Information When Allocating Support

question 100

Multiple Choice

Managers can improve the quality of information when allocating support department costs by:
I. Using single-rate allocation
II. Using dual-rate allocation
III. Choosing cost drivers for allocation bases

• A) I only
• B) II only
• C) I and III only
• D) II and III only

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Definitions:

Cost Per Unit

The total cost associated with producing one unit of a product, including fixed and variable costs.

Economic Profit

The disparity between what a company earns in total and what it spends, counting both direct and indirect costs.

Self-Interest

The motivation driving individuals to pursue their own benefits or advantages, often considered a fundamental economic assumption.

Guiding Function Of Prices

The role of prices in signaling to both buyers and sellers about the relative scarcity or abundance of goods and services, thus guiding their economic decisions.