Product Costs Estimated Using the Direct Method of Cost Allocation

question 41

Multiple Choice

Product costs estimated using the direct method of cost allocation

• A)the first step is to develop a reciprocal cost equation.
• B)the first step is to allocate the service department costs to the production departments.
• C)one service department is chosen to allocate costs first.
• D)service department costs are allocated directly to the production departments.

---

Definitions:

Reinvestment

The process of using the proceeds from an investment to purchase additional assets or securities in order to potentially increase wealth.

Self-Dealing

Any instance in which directors or officers make decisions that violate their corporate duty of loyalty.

Duty of Loyalty

An agent’s obligation to act in the interest of the principal.

Fifth Amendment

An amendment to the US Constitution that provides several rights to individuals, including protection against self-incrimination and double jeopardy.