Allocation of Costs to Various Cost Objects May

question 55

Multiple Choice

Allocation of costs to various cost objects may:

• A) affect managers' performance evaluation.
• B) affect the overall profitability of a company.
• C) affect the apparent profitability of the various products a company makes.
• D) affect managers' performance evaluation and the apparent profitability of the various products a company makes.

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Definitions:

Straight-Line Rate

A method of calculating depreciation of an asset, which assumes the asset will lose an equal amount of value each year over its useful life.

Annual Straight-Line Depreciation

A method of calculating the depreciation of an asset, spreading its cost evenly over its useful life.

Straight-Line Depreciation Rate

A method of calculating the depreciation of an asset, where the asset's cost is evenly distributed over its useful life.

Useful Life

The estimated duration an asset is expected to be economically usable, with normal wear and tear.