Basic Guidelines That Should Be Followed When Allocating Support Department

question 51

Multiple Choice

Basic guidelines that should be followed when allocating support department costs include

• A) actual costs should always be used for allocations.
• B) budgeted costs, not actual costs, should be allocated.
• C) service department costs should never be allocated at the beginning of the period.
• D) both a and b.

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Definitions:

Cash Received

The total amount of cash collected by a company during a specific period, including revenues, loans, and investments.

Salvage Value

The estimated residual value of an asset at the end of its useful life, which can be recovered through disposal.

Depreciation Expense

The distribution of a physical asset's cost throughout its lifespan.

Double Declining-Balance Method

An accelerated depreciation method that uses up to twice the straight-line rate multiplied with the book value of asset to calculate depreciation expense. Residual value is not subtracted from the cost of an asset in this calculation.