Answer the Following Questions Using the Information Below

question 61

Multiple Choice

Answer the following questions using the information below:
Marpole Enterprises has identified three cost pools to allocate overhead costs.The following estimates are provided for the coming year:
The accounting records show the Bossman Job consumed the following resources:

-When selling prices are based on costs assigned using the single cost driver, direct labour hours, then the Bossman job

• A)is fairly billed because resources are allocated uniformly to all jobs.
• B)is grossly under billed for the job, while other jobs will be unfairly over billed.
• C)may increase overall sales as other jobs will be cross-subsidized.
• D)will contribute too little to profits, and Gregory Enterprises will not want to accept additional work from the company.
• E)will likely seek to do business with competitors.

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Definitions:

Expense Recognition Principle

An accounting principle that dictates that expenses should be recognized in the period in which they contribute to the generation of revenue.

Income Statement

A financial report that shows a company's revenues, expenses, and profits over a specific period, indicating its financial performance.

Incurred

Refers to costs or expenses that have been recognized or acquired, usually due to a company's operations or activities.

Interest Expense

The cost incurred by an entity for borrowed funds, representing the price paid for the use of borrowed money or for delaying the repayment of a debt.