Each Cost Pool Is Distributed to Each Responsibility Centre In

question 80

Multiple Choice

Each cost pool is distributed to each responsibility centre in:

• A) proportion to that centre's relative amount of allocation base.
• B) proportion to that centre's relative amount of direct cost.
• C) proportion to that centre's relative amount of liabilities.
• D) proportion to that centre's relative amount of profit.

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Definitions:

Fixed Cost

Expenses that do not change with the level of production or sales activity, such as rent or salaries.

Work in Process-Department X

Inventory representing partially completed goods that are still in the production process within a specific department.

Goods in Process

Inventory items that are partially completed in the production process.

Owner's Equity

The residual interest in the assets of the entity after deducting liabilities, representing the ownership interest of the business owners.