In an Income Statement Segmented by Product Line,a Fixed Expense

question 146

Multiple Choice

In an income statement segmented by product line,a fixed expense that cannot be allocated among product lines on a cause-and-effect basis should be:

• A)classified as a traceable fixed expense and not allocated.
• B)allocated to the product lines on the basis of sales dollars.
• C)allocated to the product lines on the basis of segment margin.
• D)classified as a common fixed expense and not allocated.

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Definitions:

Producer Surplus

Producer surplus is the difference between the amount producers are willing and able to supply a good for and the actual amount they receive due to market price.

Autarky

An economic system wherein a country or entity is self-sufficient and does not engage in international trade.

Producer Surplus

The difference between what producers are willing to accept for a good or service and the actual price they receive, representing the benefit to producers.

Total Surplus

The total net gain to consumers and producers from trading in a market; the sum of the producer surplus and the consumer surplus.