An Allocation Base Is

question 113

Multiple Choice

An allocation base is:

• A) Normally related to cost changes in a traditional costing system
• B) A measure of activity that causes costs to fluctuate
• C) Seldom related to cost changes in an ABC system
• D) Often used incorrectly as a synonym for "cost driver"

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Definitions:

Stockholders

Individuals or entities that legally own one or more shares of stock in a joint-stock company, thus having a claim to a part of the company's assets and earnings.

Acquiring Company

A company that purchases more than 50% of the shares of another company, making the latter its subsidiary.

Tender Offer

A public, open offer or invitation (usually announced in a newspaper) by a prospective acquirer to all stockholders of a publicly traded corporation to tender their stock for sale at a specific price during a specified time.

Book Value

The net value of a company's assets minus its liabilities, as shown on its balance sheet, often used to estimate the company's value.