In Practice,companies Often Inappropriately Allocate Fixed Cost Pools for Service

question 49

Multiple Choice

In practice,companies often inappropriately allocate fixed cost pools for service departments to producing departments on the basis of ________ instead of ________.

• A) budgeted costs; actual costs
• B) actual costs; budgeted costs
• C) capacity used; capacity available
• D) capacity available; capacity used

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Definitions:

Liquidation

Liquidation is the process of bringing a business to an end and distributing its assets to claimants, often occurring when a company is insolvent.

Reorganization

The process of restructuring a company's business operations, finances, or structure to improve profitability or efficiency.

Total Liabilities

The sum of all financial debts or obligations that a company owes to outside parties, recorded on the balance sheet.

Notes Payable

Liabilities in the form of written promissory notes that a business owes to others, typically payable within a year or more.