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:

Industrialized

Pertains to countries or regions that have developed complex and diverse economies with extensive industrial activity as compared to agriculture or primary production.

Scarcity

Refers to the basic economic problem of having seemingly unlimited human wants in a world of limited resources.

Economics

The social science that studies the production, distribution, and consumption of goods and services.

Physical Capital

Assets owned by a business that are tangible and can be used in the production process, such as machinery, buildings, and equipment.