On January 15, 2020, Link Corp $\quad$ $\quad$ $\quad$

question 54

Short Answer

On January 15, 2020, Link Corp. paid $ 480,000 in property taxes on its factory building for the calendar year 2020. In the first week of April 2020, the corporation made unanticipated repairs to its plant equipment at a cost of $ 1,200,000. How should these expenses be reflected in Link's quarterly income statements? $\quad$ $\quad$ $\quad$ $\quad$ $\quad$$\text { Three Months Ended }$
$\quad \quad 3 / 31 / 20 \quad 6 / 30 / 20 \quad 9 / 30 / 20 \quad 12 / 31 / 20$
A) $\begin{array}{lccc}\$ 120,000 & \$ 520,000 & \$ 520,000 & \$ 520,000 \\\end{array}$
B) $\begin{array}{lccc}\$ 120,000 & \$ 1,320,000 & \$ 120,000 & \$ 120,000 \\\end{array}$
C) $\begin{array}{lccc}\$ 480,000 & \$ 1,200,000 & \$-0- &\quad \$-0- \\\end{array}$
D) $\begin{array}{lccc}\$ 420,000 & \$ 420,000 & \$ 420,000 & \$ 420,000\end{array}$

• A)\(\begin{array}{lccc}
• \$ 120,000 & \$ 520,000 & \$ 520,000 & \$ 520,000 \\\end{array}\)
• B)\(\begin{array}{lccc}\$ 120,000 & \$ 1,320,000 & \$ 120,000 & \$ 120,000 \\\end{array}\)
• C)\(\begin{array}{lccc}\$ 480,000 & \$ 1,200,000 & \$-0- &\quad \$-0- \\\end{array}\)
• D)\(\begin{array}{lccc}\$ 420,000 & \$ 420,000 & \$ 420,000 & \$ 420,000
• \end{array}\)

Evaluate the role of service departments within a company and how their costs are allocated to operating departments.

Analyze the financial implications of internal transfers and cost allocations on divisional performance.

Identify the effects of peak-period demand on budgeting and cost allocations.

Understand policies for service department cost allocation and evaluate their effectiveness.

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Definitions:

Dumping

The practice of selling a product in a foreign market at a price that is below the cost of production or below the price in the home market, often with the aim of driving out competition.

Producer

A producer is an individual or organization that creates goods or services for sale to consumers or other businesses.

Export

The sale of goods or services produced in one country to another country.

Worldwide Monopoly

A market structure in which a single company or entity has exclusive control over the production and sale of a product or service across the globe.