Criteria for Selecting Allocation Bases for Service Department Allocations Should

question 114

Multiple Choice

Criteria for selecting allocation bases for service department allocations should not include:

• A) direct,traceable benefits from the service.
• B) the extent of facilities provided.
• C) the ease of making an allocation.
• D) sales dollars generated during the perioD.
• Revenues are never a good base for allocating service costs.

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Definitions:

Marginal Cost

The boost in aggregate costs that comes from generating one extra unit of a product or service.

Non-collusive Oligopolist

An oligopolistic market structure participant that competes without agreements or cooperation with rivals to influence market prices or output.

Marginal Revenue Curve

Represents the change in total revenue from selling one additional unit of a product or service.

Equilibrium Price

Equilibrium Price is the price at which the quantity of a good or service demanded equals the quantity supplied, resulting in market balance.