If Management Wants to Choose a Method of Revenue Allocation

question 59

Multiple Choice

If management wants to choose a method of revenue allocation that best captures the "benefits received" by customers then they would use ________ to allocate revenue to products in a bundle.

• A) stand-alone revenue -allocation based on unit costs
• B) stand-alone revenue-allocation based on selling prices
• C) stand-alone revenue-allocation based on physical units
• D) stand-alone revenue-allocation based on unit costs

---

Definitions:

Machine-Hours

A measure of production time where one machine-hour equals the operation of one machine for one hour.

Direct Labor-Hours

The total hours worked by employees directly involved in the manufacturing process, used as a base for allocating overhead costs to products.

Machining

A manufacturing process involving the shaping of metal or other materials through controlled material-removal techniques.

Customizing

The process of making or modifying something according to a customer's individual requirements.