Pride Company Is Preparing a Segmented Income Statement, Subdivided into Departments

question 47

Multiple Choice

Pride Company is preparing a segmented income statement, subdivided into departments (billing, purchasing, and telemarketing) . Which of the following choices correctly describes the accounting treatment of the firm's compensation cost for key executives (president and vice-presidents) ?

• A) The cost is charged to the departments.
• B) The cost is not charged to the departments because, although easily traceable to the departments, it is not controllable at the departmental level.
• C) The cost is not charged to the departments because, although controllable at the departmental level, it is not easily traceable to the departments.
• D) The cost is not charged to the departments because it is both easily traceable to the departments and controllable by the departments.
• E) The cost is not charged to the departments because it is neither easily traceable to the departments nor controllable by the departments.

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Definitions:

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