(CPA)Which of the Following Statements Is True About Support Cost

question 34

Multiple Choice

(CPA) Which of the following statements is true about support cost allocation?

• A)Companies can maximize or minimize their income by selecting different allocation bases for support costs
• B)Companies can select allocation bases to raise or lower reported income on given products
• C)Companies' total incomes will remain unchanged no matter how support costs are allocated
• D)Companies should usually allocate support costs randomly or based on an ability-to-bear criterion

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Definitions:

Average Total Assets

A measure used in financial analysis, calculated as the average of a company's total assets at the beginning and end of a period, providing insight into the investment in assets.

Sales

The total amount of revenue generated from the sale of goods or services by a company during a specific period.

Gross Method

An accounting method for recording purchases at the invoice price without deducting any cash discounts offered.

Sales Discounts

A reduction in the price of goods or services offered to customers to encourage prompt payment.