Indirect Expenses Should Be Allocated to Departments Based Upon the Benefits

question 144

True/False

Indirect expenses should be allocated to departments based upon the benefits received by each department.

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Definitions:

Margin

The difference between the selling price of a product or service and its cost, often expressed as a percentage of the selling price.

Operating Assets

Assets used by a company in its day-to-day operations to generate revenue, excluding investments and non-operational assets.

Combined Margin

A financial metric that combines various profit margins (e.g., gross, operating, net) to give a comprehensive overview of a company's profitability.

Net Operating Income

The total profit of a company after operating expenses are subtracted from total revenue, but before deducting taxes and interest.