The Reciprocal Allocation Method ________

question 45

Multiple Choice

The reciprocal allocation method ________.

• A) is the most widely used because of its simplicity
• B) requires the ranking of support departments in the order that the allocation is to proceed
• C) highlights the complete reciprocated costs of support departments and how these costs differ from budgeted or actual costs of the departments
• D) allocates support-department costs to other support departments and to operating departments in a sequential manner that partially recognizes the mutual services provided among all support departments

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Definitions:

Basis Points

A unit of measure used in finance to describe the percentage change in the value or rate of a financial instrument, equal to 1/100th of a percent.

Corporate Bond

A debt security issued by a corporation to raise funds, promising to pay back the principal along with interest at a specified rate and schedule.

Yield To Maturity

The total return anticipated on a bond if it is held until its expiration date.

Par Value

The nominal face value of a bond or stock as stated by the issuer, often used to determine interest payments.