The Step Down Method of Allocating Service Department Costs to Producing

question 124

Multiple Choice

The step down method of allocating service department costs to producing departments recognizes that service departments provide support activities in ________ departments and ________ departments.

• A)producing; traditional
• B)producing; other service
• C)activity-based costing; traditional costing
• D)variable-costing; absorption-costing

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Definitions:

Risk Premium

The excess return required from an investment in a risky asset over a risk-free investment.

Flotation Costs

The costs associated with issuing new securities, including underwriting, legal, registration, and other expenses.

Securities

Investment assets that denote a shareholding in a publicly-listed company (stock), a bondholder’s claim against a corporation or government, or ownership rights as outlined in an option contract.

Project Costs

Project Costs include all expenses incurred during the execution of a project, including materials, labor, and overhead.