The Proper Treatment of the Cost of Unused Capacity, as Identified

question 110

Multiple Choice

The proper treatment of the cost of unused capacity, as identified through the use of an activity-based budgeting (ABB) system, is to charge the amount to:

• A) Customers whose uneven orders caused the unused capacity.
• B) A "deferred asset" account on the balance sheet.
• C) A "deferred credit" account on the balance sheet.
• D) All products produced during the area (via overhead application rates).
• E) The product line, department, or a given manager within the organization where the decision to acquire the capacity was made.

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Definitions:

Ferns

Non-flowering plants with feather-like leaves that reproduce via spores, lacking seeds and flowers.

Horsetails

A group of vascular plants from the genus Equisetum, known for their reed-like appearance, that reproduce through spores instead of seeds.

Silica

A mineral compound made of silicon and oxygen (SiO2), commonly found in quartz and used in various technologies and construction materials.

Scouring Pads

Abrasive materials used for cleaning to remove tough dirt, stains, and material from surfaces without damaging them.