Common Allocated Fixed Costs Are an Issue in Evaluating Segment

question 139

Essay

Common allocated fixed costs are an issue in evaluating segment performance.Answer the following questions relating to common fixed costs.
a.What are two other terms used in referring to common costs?
b.Where are common allocated fixed costs shown on a segment margin income statement?
c.When do traceable fixed costs become common costs?

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Definitions:

Lockbox System

A service provided by banks to process payments by collecting and depositing checks into the company's account quickly.

NPV

Net Present Value (NPV) is a method used in capital budgeting to determine the value of an investment by calculating the present value of expected future cash flows using a specific discount rate.

Cash Concentration Accounts

Bank accounts used by companies to concentrate cash from multiple accounts into one for efficient management and utilization.

Zero-Balance Accounts

Banking accounts that are maintained at a zero balance and have funds automatically transferred from a master account in the exact amount needed for specific transactions.