ABC Corporation Has Three Service Departments with the Following Costs

question 176

Multiple Choice

ABC Corporation has three service departments with the following costs and activity base: ABC has three operating divisions, Micro, Macro and Super. Their revenue, cost and activity information are as follows:
How much service department cost would be allocated to the Super Division?

• A) $350,000
• B) $100,000
• C) $125,000
• D) $550,000

Comprehend the direct relationship between potential returns and the level of risk assumed.

Identify common misconceptions regarding credit limits and their determination.

Understand the relationship between risk and safety in investment contexts.

Recognize the preferences and benefits of holding preferred stocks over common stocks.

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Definitions:

Financial Basis

In accounting, the underlying value or cost of an asset or investment used for tax reporting and calculating gains or losses.

IRR

Internal Rate of Return, a financial metric used to estimate the profitability of potential investments by identifying the rate of growth a project is expected to generate.

Profitability Index

A calculation that compares the present value of all future cash flows of an investment to its initial cost, used to assess its profitability.

Net Present Value (NPV)

The calculation used to find today's value of a future stream of payments and receipts, factoring in the time value of money.