A Number of Costs That Are Commonly Allocated Are Listed $\text { Cost Description } \quad \quad \quad \quad \quad \quad \quad \quad \quad \text { Allocation Base Alternatives }$

question 52

Essay

A number of costs that are commonly allocated are listed in the following table followed by two alternative cost allocation bases.
$\text { Cost Description } \quad \quad \quad \quad \quad \quad \quad \quad \quad \text { Allocation Base Alternatives }$
$\begin{array}{|l|l|l|}\hline \text { Cafeteria costs } & \text { Direct labor costs } & \text { Number of employees } \\\hline \text { Computer system costs } & \text { Number of departments } & \text { Amount of computer time used } \\\hline \text { Indirect labor costs } & \text { Direct labor hours } & \text { Number of supervisors } \\\hline \text { Indirect materials } & \text { Direct labor hours } & \text { Direct material dollars } \\\hline \text { Factory rent } & \text { Number of departments } & \text { Square footage } \\\hline \text { Fringe benefits costs } & \text { Number of departments } & \text { Number of employees } \\\hline \text { Housekeeping costs } & \text { Square footage } & \text { Number of employees } \\\hline \text { Joint costs } & \text { Number of joint products } & \text { Sales value at split-off } \\\hline \text { Maintenance costs } & \text { Machine hours } & \text { Number of employees } \\\hline \text { Personnel department costs } & \text { Number of employees } & \text { Number of departments } \\\hline\end{array}$
Required:
For each cost listed,circle the cost allocation base that you believe would be more appropriate for allocating the cost.

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Definitions:

Repayment of Borrowings

The process of paying back borrowed funds to creditors, including the principal amount and any applicable interest.

Statement of Cash Flows

A financial report detailing how variations in income and balance sheet accounts influence cash and cash equivalents, segmented into operating, investing, and financing activities.

Interest Paid

The amount of money paid by a borrower to a lender in return for the use of borrowed funds, calculated as a percentage of the loan amount.

Dividends Paid

Distribution of a portion of a company's earnings, decided by the board of directors, to a class of its shareholders.