When the Cost of Services from a Shared Activity Is

question 76

Multiple Choice

When the cost of services from a shared activity is ________ the cost of comparable services provided by a division itself or by an outside supplier than the division, general managers have a strong incentive ________.

• A) less than; to use the services of shared activities
• B) greater than; to use the services of shared activities
• C) less than; to use the services of an outside supplier
• D) equal to; to use the services of an outside supplier

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Definitions:

Straight-Line Depreciation

A way to distribute the expense of a concrete asset throughout its life expectancy in uniform annual figures.

Present Value Interest Factors

A factor that can be used to calculate the present value of a sum that is to be received in the future.

Guaranteed Residual Value

The predetermined value guaranteed to the lessee by the lessor or a third party, ensuring the asset will have a certain value at the end of the lease term.

Maintenance Agreement

A contract in which one party agrees to maintain an asset owned by another party, typically involving regular service checks and repairs.