What Is the Biggest Advantage of Using Practical Capacity to Allocate

question 70

Multiple Choice

What is the biggest advantage of using practical capacity to allocate costs?

• A)It is a value that is readily available
• B)It focuses management's attention on unused capacity
• C)It burdens the user divisions with the costs of unused capacity
• D)It never causes over- or under-allocated overhead

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Definitions:

Issued

Refers to the number of shares that a corporation has sold to investors or otherwise put into circulation.

Straight-Line Method

A method of depreciation that allocates an equal amount of depreciation each year over the useful life of an asset.

Bond Discount

The difference between the face value of a bond and its selling price when the bond is sold for less than its face value.

Premium

An amount paid in addition to a standard price, rate, or value, often indicating a higher level of quality or service.