Assume the Cost Object Is Customers

question 89

Multiple Choice

Assume the cost object is customers.Why should indirect costs associated with customers be allocated to customers instead of producing departments?

• A) The allocation to customers would be based on production-related output measures that are related to the cause of customer-service costs.
• B) The allocation to customers would be based on production-related output measures that are probably not related to the cause of customer-service costs.
• C) The cost-allocation base cannot be determined.
• D) Actual costs would be used instead of budgeted costs.

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Definitions:

Componential Intelligence

A facet of Sternberg's Triarchic Theory of Intelligence that involves analytical problem-solving abilities, including the ability to evaluate, analyze, and compare.

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Knowledge that is difficult to transfer to another person by writing it down or verbalizing it, often gained through personal experience.