Match Each Description Below to the Appropriate Method for Allocating

question 80

Short Answer

Match each description below to the appropriate method for allocating costs (a-c).
-Support department costs are simply combined with all other overhead costs and total overhead is applied using one cost driver.
A)Single plantwide overhead rate
B)Multiple production department rates
C)Activity-based costing

• A)Single plantwide overhead rate
• B)Multiple production department rates
• C)Activity-based costing

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Definitions:

Economic Loss

A situation where total costs exceed total revenues, indicating that a firm is not covering its opportunity costs.

Accounting Profit

The calculated income of a business or company after subtracting all explicit costs from total revenues.

Average Variable Cost

Calculated by dividing the total variable costs by the quantity of output produced, representing the variable cost per unit of output.

MR = MC

The condition where marginal revenue equals marginal cost, often used to determine the profit-maximizing output level for a firm.