In a Costing System, ________

question 153

Multiple Choice

In a costing system, ________.

• A) cost tracing allocates indirect costs
• B) cost allocation assigns direct costs
• C) a cost-allocation base can be either financial or nonfinancial
• D) a cost object should be a product and not a department or a geographic territory

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Definitions:

Net Income

The total profit of a company, after all expenses and taxes have been subtracted from total revenue.

Dividends

Payments made by a corporation to its shareholder members, usually as a distribution of profits.

Common Stock

Equity ownership in a corporation, offering voting rights and dividends to shareholders, subordinate to preferred stock.

Retained Earnings

The portion of net income that is not distributed to shareholders as dividends but is kept by the company for reinvestment or to pay off debt.