Which of the Following Statements Is False with Regards to Departmental

question 13

Multiple Choice

Which of the following statements is false with regards to departmental cost allocations?

• A) amounts allocated to departments will most likely differ depending on the cost allocation method used
• B) the total amount allocated among departments will differ in total depending on the cost allocation method used
• C) the reciprocal method is usually the most conceptually precise method because it considers mutual services provided among all support departments
• D) the step-down and direct methods are simple for managers to compute and understand relative to the reciprocal method

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Definitions:

Demand Curve

A graph showing the relationship between the price of a good or service and the quantity demanded for a given period.

Price Elasticity

measures how sensitive the quantity demanded or supplied of a good is to a change in its price, indicating the responsiveness of market participants to price changes.

Price Elasticity

A measure of the responsiveness of the quantity demanded of a good to a change in its price.

Quantity Demanded

The total amount of a good or service that consumers are willing and able to purchase at a specific price point.