Consider the Following Statements Regarding Cost Allocation

question 57

Multiple Choice

Consider the following statements regarding cost allocation.
i. Allocation of budgeted costs is preferred to actual cost as this minimises the possibility that the actions of one user department will affect the costs allocated to another user department.
ii. Allocation of standard budgeted rates is preferred, so the user department does not have to bear the inefficiencies of support departments.
iii. Knowing the standard rates in advance allows the user departments to plan their activities with greater certainty.
Which statement/s is/are true?

• A) i
• B) i and ii
• C) i, ii and iii
• D) ii and iii

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Definitions:

Safeguard

Measures or controls put in place to protect assets, including physical security and internal controls.

Signature Card

A document signed by an account holder at a financial institution that provides a specimen signature for the purpose of verifying future transactions.

ABA Code

A nine-digit identification number assigned to banks in the United States by the American Bankers Association, used for routing checks and electronic payments.

Federal Reserve District

One of the twelve regions established by the Federal Reserve Act, each with a Federal Reserve Bank, to regulate and oversee banking operations in the United States.