The Simplest Cost Allocation Method Is The

question 73

Multiple Choice

The simplest cost allocation method is the:

• A) Direct method
• B) Step-down method
• C) Reciprocal method
• D) None of the above

---

Definitions:

Variable Costing

An accounting method that includes only variable production costs in the cost of goods sold and treats fixed production costs as period expenses.

Net Operating Income

The profit generated from a company's core business operations, distinct from earnings from investments or tax effects.

Operating Loss

A situation where a company's operating expenses exceed its gross profits or revenues.

Year 2

Typically refers to the second year of a business or project, often used in the context of financial or growth performance analysis.