To Discourage Excessive Use of a Support Department, Management Might

question 104

Multiple Choice

To discourage excessive use of a support department, management might

• A)not allocate any costs of the support departments.
• B)allocate costs based on user department usage.
• C)allocate a fixed amount to each department regardless of use.
• D)expense fixed costs of support departments directly to the income statement.
• E)create special accounting records for the support department.

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Definitions:

Supply Curve

A graphical representation showing the relationship between the price of a good and the quantity of that good that suppliers are willing to sell.

Market

A place or virtual space where buyers and sellers come together to trade goods, services, or financial instruments, determining the prices through supply and demand.

External Cost

Costs of a transaction that affect people who are not part of the transaction.

Private Value

The estimate of worth that an individual or company assigns to an asset, good, or service, reflecting personal assessments rather than market-driven prices.