Kilowatt Hours Would Be an Appropriate Basis for Distributing the Cost

question 60

Multiple Choice

Kilowatt hours would be an appropriate basis for distributing the cost of which of the following service departments to production departments?

• A)Power
• B)Machine Maintenance
• C)Human Resources
• D)Building Maintenance

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Definitions:

Allowance Method

Bases bad debt expense on an estimate of uncollectible accounts.

Bad Debt Expense

An expense reported on the income statement, representing the value of accounts receivable deemed non-collectible.

Accounts Receivable

Amounts owed to a company by customers for goods or services that have been delivered or used but not yet paid for.

Net Income

The residual income of a business following the subtraction of all taxes and costs from the total revenue.