Palin Inc Has Started a New System of Allocating Costs According

question 17

Multiple Choice

Palin Inc. has started a new system of allocating costs according to what their employees do, rather than what the company spends. For example, labor expenses are allocated to employee tasks rather than salary and benefits. This practice is referred to as

• A) cost accounting.
• B) accounting auditing.
• C) task accounting.
• D) activity-based costing.
• E) allocation costing.

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Definitions:

Economies of Scale

Cost advantages that a business can achieve by increasing the scale of production, leading to a lower cost per unit of output.

Economic Profit

The difference between a firm’s total revenue and its total costs, including both explicit and implicit costs.

Opportunity Cost

The cost of forgoing the next best alternative when making a decision or choice.

Monetary Payments

Transactions involving the transfer of money in exchange for goods or services.