Which of the Following Steps Is Not Always Part of Allocating

question 96

Multiple Choice

Which of the following steps is not always part of allocating support department costs?

• A) Allocating costs to units of product or service
• B) Clarifying the purpose of the allocation
• C) Choosing an allocation base
• D) Assigning costs to cost pools

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Definitions:

Period Costs

Expenses that are not directly tied to the production process and are expensed in the period in which they occur, such as selling and administrative expenses.

Contribution Margin

The difference between sales revenue and variable costs of a product or service, indicating how much contributes to covering fixed costs and generating profit.

Direct Manufacturing Cost

Expenses directly tied to the production of goods, including materials and labor costs.

Indirect Manufacturing Costs

Expenses related to the production process that cannot be directly traced to individual products, such as utilities or salaries for management.