Which of the Following Is True Concerning Cost Allocation in a Multi-Product

question 128

Multiple Choice

Which of the following is true concerning cost allocation in a multi-product company?

• A) Where the indirect costs are variable and each product is assembled sequentially, the causality criterion can guide the choice of a cost allocation base.
• B) Where the indirect costs are fixed and each product is assembled sequentially, the causality criterion can guide the choice of a cost allocation base.
• C) Where the indirect costs are variable and each product is not assembled sequentially, the causality criterion can guide the choice of a cost allocation base.
• D) Where the indirect costs are fixed and each product is not assembled sequentially, the causality criterion can guide the choice of a cost allocation base.
• E) Where the indirect costs are variable and the products are produced jointly, it is not possible to identify specific cause-and-effect relationships between work on an individual product and total costs incurred.

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Definitions:

Lump Sum

A one-time transaction made at a specific moment, rather than several payments spread across a period.

Withdraw

To remove funds from a bank account or investment.

Semi-Annually

Occurring or done every six months or twice a year.

Annual Payments

Payments made once a year as part of a financial agreement, such as loans, annuities, or investments.