When the Purpose of Cost Allocation Is to Provide Information

question 103

Multiple Choice

When the purpose of cost allocation is to provide information for economic decisions or to motivate managers and employees,the best criteria are ________.

• A) the cause-and-effect and the ability-to bear criteria
• B) the cause-and-effect and the benefits-received criteria
• C) the benefits-received and the fairness criteria
• D) the fairness and the ability-to-bear criteria

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Definitions:

Control Phase

The stage in a process or project where monitoring occurs to ensure that objectives are being met and to implement corrective actions if necessary.

Overall Company Goals

Broad and general objectives that an organization seeks to achieve over a long-term period, guiding its mission and strategic direction.

Just-In-Time (JIT)

A production and inventory control system in which materials are purchased and units are produced only as needed to meet actual customer demand.

Customer Demand

The total amount of a product or service that consumers are willing to purchase at a given price level within a specific time period.