If a Cost Is a Common Cost of the Segments

question 14

Multiple Choice

If a cost is a common cost of the segments on a segmented income statement, the cost should:

• A)be allocated to the segments on the basis of segment sales.
• B)not be allocated to the segments.
• C)excluded from the income statement.
• D)treated as a product cost rather than as a period cost.

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Definitions:

Periodic System

An accounting system where inventory is updated at specific periods rather than continuously, typically used for calculating cost of goods sold at the end of an accounting period.

Ending Inventory

The aggregate value of products available for purchase at the conclusion of a financial period.

LIFO Method

Last In, First Out method; an inventory valuation technique where the latest items added to inventory are the first ones removed during sales.

FIFO

"First In, First Out," an inventory valuation method where the earliest items purchased are the first to be sold.