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:

Schematic Diagram

illustrates the elements of a system using abstract, graphic symbols rather than realistic pictures, emphasizing connections and relationships.

Crossover Point

The crossover point is the level at which two different options or strategies result in the same outcome or cost, often used in decision-making processes.

Fixed Costs

Fixed charges that are unaffected by changes in production or sales volumes, including rental fees, wages, and insurance costs.

Variable Costs

Expenses that change in proportion to the activity or volume of a business operation, such as materials and labor.