Under Dual-Cost Allocation, Fixed Costs Are Allocated on the Basis

question 36

Multiple Choice

Under dual-cost allocation, fixed costs are allocated on the basis of a user department's:

• A) long-run usage of a service department's output.
• B) short-run usage of a service department's output.
• C) long-run usage and short-run usage of a service department's output.
• D) neither long-run usage nor short-run usage of a service department's output.
• E) either long-run usage or short-run usage of a service department's output.

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Definitions:

Automated Factory

A production facility that relies heavily on automated processes and machinery to manufacture goods with minimal human intervention.

Fixed Expenses

Costs that do not vary with the level of production or sales, such as rent, insurance, and salaries.

Variable Expenses

Expenses that change in proportion to the activity of a business, such as sales commissions that rise with increased sales or materials costs that rise with increased production.

Discontinue Product

The decision to stop manufacturing, selling, or supporting a product based on criteria such as sales performance, profitability, or strategic alignment.