The Concepts of Cost Allocation That Are Used in Manufacturing

question 58

Multiple Choice

The concepts of cost allocation that are used in manufacturing can also apply in:

• A) service and not-for-profit industries.
• B) service industries only.
• C) not-for-profit industries only.
• D) limited instances outside of manufacturing.

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Definitions:

Controllable Fixed Costs

Expenses that can be managed or influenced by decisions made by a company's management, such as advertising expenditures.

Operating Assets

Assets used by a business in its day-to-day operations to generate revenue.

Controllable Margin

A financial metric that represents the amount of profit or contribution margin that management can directly influence through its decisions.

Operating Assets

Assets that a business uses for its day-to-day operational activities to generate revenue, excluding investment and non-operational assets.