Cervetti,Inc

question 16

Multiple Choice

Cervetti,Inc.,allocates service department costs to operating departments using the step-down method.The company has two service departments,Administration and Physical Plant,and two operating departments,Assembly and Testing.Data concerning those departments follow:
Administration Department costs are allocated first on the basis of employee time and Physical Plant Department costs are allocated second on the basis of space occupied.The total Testing Department cost after allocations is closest to:

• A) $754,279
• B) $757,240
• C) $748,960
• D) $757,368

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Definitions:

Systematic Risk

The risk inherent to the entire market or market segment, representing factors that affect all companies such as economic, political, or social changes.

Diversifiable Risk

The portion of an investment's risk that can be reduced or eliminated through portfolio diversification, also known as unsystematic risk.

Unsystematic Risk

The type of risk that is unique to a specific company or industry, unpredictable and can be mitigated through diversification.

Minable Gold Reserves

The quantity of gold that is economically viable to extract from the earth's crust.