Cope, Inc Has the Following Costs and Usage Data for Its

question 57

Multiple Choice

Cope, Inc. has the following costs and usage data for its support departments: If the step-down method is used and the order of allocation is based on the quantity of service each support department provides to other support departments, the total cost of support department C will be:

• A) $30,000
• B) $37,750
• C) $42,000
• D) $49,750

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Definitions:

Productive Efficiency

A situation where a good or service is produced at the lowest possible cost.

Allocative Efficiency

A state of the economy in which resources are allocated in a way that maximizes the total benefit to society.

Collusive Oligopoly

A market structure where a few firms dominating the market agree to set prices or output levels, reducing competition and maximizing collective profits.

Limit Pricing

A strategy where a firm sets the price of its products low enough to discourage new competitors from entering the market.