Which Formula Best Represents the First Step Used to Allocate

question 28

Multiple Choice

Which formula best represents the first step used to allocate an indirect cost to a cost object?

• A) Total cost to be allocated divided by cost driver
• B) Cost driver divided by allocation rate
• C) Cost driver divided by total cost to be allocated
• D) Allocation rate divided by total cost to be allocated

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Definitions:

Retail Gift Stores

Commercial establishments focusing on selling various gift items including souvenirs, handmade crafts, and other unique products to customers.

Ordinary Simple Interest

Interest calculated on the principal amount of a loan or investment, based on a 360-day year.

Ordinary Simple Interest

A method for calculating the interest charge on a loan or investment based on the original principal, rate, and length of time, without compounding.

360-Day Year

A financial calculation assumption where the year is considered to have 360 days for simplifying interest related calculations.