The Underlying Principle of Allocating Operating Expenses to Departments Is

question 189

True/False

The underlying principle of allocating operating expenses to departments is to assign to each department an amount of expense proportional to the revenues of that department.

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Definitions:

U-shaped

A description often used to illustrate how certain economic variables, such as average cost, behave, initially decreasing with increased activity and then increasing.

TVC

Total Variable Cost, which refers to the sum of all costs that vary with the level of output or production, such as raw materials and direct labor costs.

TC

An abbreviation for Total Cost, it quantifies the overall expense incurred in the production of goods or services, encompassing both fixed and variable costs.

Diseconomies of Scale

The phenomenon where production costs per unit increase as a firm's output expands, often due to complexities and inefficiencies at larger scales.