A Number of Costs That Are Commonly Allocated Are Listed

question 116

Essay

A number of costs that are commonly allocated are listed in the following table followed by two alternative cost allocation bases. $$\begin{array} { | l | l | l | } \hline \text { Cost Description } & { \text { Allocation Base Altematives } } \\\hline \text { Cafetena costs } & \text { Direct labor costs } & \text { Number of employees } \\\hline \text { Computer system costs } & \text { Number of departments } & \text { Amount of computer time used } \\\hline \text { Indirect labor costs } & \text { Direct labor hours } & \text { Number of supervisors } \\\hline \text { Indirect materials } & \text { Direct labor hours } & \text { Drrect material dollars } \\\hline \text { Factory rent } & \text { Number of departments } & \text { Square footage } \\\hline \text { Fringe benefits costs } & \text { Number of departments } & \text { Number of employees } \\\hline \text { Housekeeping costs } & \text { Square footage } & \text { Number of employees } \\\hline \text { Joint costs } & \text { Number of joint products } & \text { Sales value at split-off } \\\hline \text { Maintenance costs } & \text { Machine hours } & \text { Number of employees } \\\hline \text { Personnel department costs } & \text { Number of employees } & \text { Number of departments } \\\hline\end{array}$$ Required: For each cost listed, circle the cost allocation base that you believe would be more appropriate for allocating the cost.

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Definitions:

Point Estimate

A single value (or point) derived from a sample that is used to estimate a population parameter.

Sample Mean

The average value calculated from a sample of data, representing the central tendency.

Population Mean

The average value of all the data points in a population, representing the central tendency of the dataset.

Stratified Sampling

A sampling method that divides the population into smaller groups, or strata, based on shared attributes or characteristics before sampling to ensure a more representative sample.