The Weakness in Using the Formula: Sales = Days Worked

question 29

Multiple Choice

The weakness in using the formula: sales = days worked x calls/days worked x orders/call x sales/orders is it:

• A)Is too easily calculated.
• B)Is too difficult to calculate.
• C)It emphasizes sales.
• D)It ignores costs.

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Definitions:

Cost Objects

Any item for which costs are separately measured and tracked, including products, services, projects, or activities.

Cost Allocation

The process of assigning indirect costs to different products, services, or business units within a company, typically using a logical allocation base.

Cost Distribution

The process of assigning or allocating an organization's costs to specific cost objects, such as products or departments.

Support Department Cost Allocation

The distribution of overhead costs from auxiliary departments (like maintenance or HR) to producing departments based on relevant allocation bases.