Cost Allocation of Shared Facilities Cost Is Intended to Remind

question 33

Multiple Choice

Cost allocation of shared facilities cost is intended to remind managers of:

• A)The cost of using a shared resource.
• B)Both the cost and value of using shared resources.
• C)How much capacity a firm has.
• D)Why the firm invests in these facilities.
• E)How dependent the managers are for these facilities.

---

Definitions:

Intra-entity Gross Profit

This refers to the gross profit earned by a company from sales made internally between its own divisions or subsidiary entities.

Cost of Goods Sold

The direct costs attributable to the production of the goods sold by a business, including materials and labor costs.

Equity Method

An accounting technique used to record investments in other companies, where the investment is initially recorded at cost and subsequently adjusted for the investor's share of the investee's profit or loss and dividends received.

Intra-entity Gross Profit

Profits resulting from transactions within the same entity, often requiring adjustment during the consolidation process for accurate financial reporting.