Which of the Following Statements Best Describes Cost Allocation

question 81

Multiple Choice

Which of the following statements best describes cost allocation?

• A)A company can maximize or minimize total company income by selecting different bases on which to allocate indirect costs.
• B)A company should select an allocation base to raise or lower reported income on given products.
• C)A company's total income will remain unchanged no matter how indirect costs are allocated.
• D)A company,as a general rule,should allocate indirect costs randomly or based on an "ability-to-bear" criterion.

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Definitions:

Money Supply

The sum quantity of financial assets in an economy at a particular instant.

Creditors

Individuals or institutions that lend money or extend credit to others, expecting repayment in the future.

Debtors

Individuals or entities that owe money to others.

U.S. Monetary Policy

The Federal Reserve's actions, involving the control of interest rates and the total supply of money in circulation, aimed at achieving macroeconomic objectives such as controlling inflation, consumption, growth, and liquidity.