An Allocation Base Is

question 113

Multiple Choice

An allocation base is:

• A) Normally related to cost changes in a traditional costing system
• B) A measure of activity that causes costs to fluctuate
• C) Seldom related to cost changes in an ABC system
• D) Often used incorrectly as a synonym for "cost driver"

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Definitions:

Cash Generating Units

A segment of a company's operations that independently generates cash flows from its activities.

Carrying Amount

The amount at which an asset is recognized in the balance sheet after deducting any accumulated depreciation (amortization) and accumulated impairment losses.

Value In Use

The value today of the cash flows that are expected to come from an asset or a revenue-producing entity in the future.

Impairment Loss

A reduction in the recoverable value of an asset below its carrying amount on the balance sheet, recognized as a loss.