Which of the Following Is TRUE Concerning Selecting a Cost-Allocation

question 154

Multiple Choice

Which of the following is TRUE concerning selecting a cost-allocation base in an ABC system?

• A)Cost-allocation bases are not relevant in defining the number of activity pools.
• B)All costs can be directly identified with a specific activity.
• C)The allocation base chosen may be constrained by the availability of reliable data.
• D)Costs may need to be allocated to services first, before the costs of services can be allocated to activities.
• E)Output unit-level costs cannot be related to a cost-allocation base.

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Definitions:

Recognized Gain

The amount of gain that is subject to tax in the year of a transaction.

Realized Gain

The profit earned from the sale of an asset, such as stocks, bonds, or real estate, which becomes taxable when the asset is sold.

Selling Expenses

Expenses incurred directly or indirectly in making a sale, such as commissions, advertising costs, and shipping expenses.

Disallowed Loss

A loss that cannot be claimed for tax deduction purposes because it does not meet certain IRS criteria.