Using the Appropriate Rationale, Which of the Following Scenarios Represents

question 11

Multiple Choice

Using the appropriate rationale, which of the following scenarios represents the proper determination of the order in which management should sequence support department allocations under the sequential method of allocating support department costs to production departments?

• A)A Janitorial support department with 50 employees should be allocated earlier than a Cafeteria support department with 25 employees.
• B)A Maintenance department with a less accurate cost driver should be allocated earlier than a Cafeteria support department with an extremely accurate cost driver.
• C)A Purchasing support department that serves one production department should be allocated earlier than a Janitorial support department serving five production departments.
• D)A Janitorial support department with a cost of $500,000 should be allocated earlier than a Purchasing support department with a cost of $30,000.

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Definitions:

Buyers

Individuals or entities that exchange money for goods or services.

Perfect Competitor

A market structure where numerous small firms compete against each other, and products are homogenous, with no single firm able to influence the market price.

Monopolistic Competitor

A firm in a market structure where many companies sell products that are similar but not perfect substitutes, leading to some degree of market power.

Long Run

A period in economics where all factors of production and costs are variable, allowing for adjustments in production levels.