Consider the Following Statements About Support Department Cost Allocations

question 65

Multiple Choice

Consider the following statements about support department cost allocations.i.The allocation of actual costs encourages support department managers to control the costs in their departments
Ii) When budgeted costs are allocated,any efficiency in support department operations are passed along to user departments.
Iii) The allocation of budgeted costs rather than actual costs gives an incentive for support department managers to control costs in their departments.Which statement/s is/are true?

• A) i
• B) ii
• C) i and ii
• D) iii

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Definitions:

Consolidated Entity

A group of companies that includes a parent and its subsidiaries, for which financial performance is presented in a single set of financial statements.

Book Value

The net value of a company's assets as recorded on the balance sheet, excluding intangible assets like goodwill.

Fair Value

Fair Value is the estimated market value of an asset or liability, based on current prices in an open market, used for financial reporting.

Gain Recognized

The profit that is realized and reported on the financial statements when an asset is sold for more than its carrying amount.