A Company Incurred $80,000 of Common Fixed Costs and $120,000

question 67

Multiple Choice

A company incurred $80,000 of common fixed costs and $120,000 of common variable costs. These costs are to be allocated to Departments A and B. Data on capacity provided and capacity used are as follows: Capacity Provided Capacity Used
Department in Hours in Hours
Assume that both fixed and variable costs are allocated on the basis of capacity used. The fixed and variable costs allocated to Department A are
Fixed Variable

• A) $40,000 $60,000
• B) $50,000 $60,000
• C) $40,000 $75,000
• D) $50,000 $75,000

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Definitions:

Cash Flow Considerations

Refers to an evaluation of how a company generates and uses cash in its business activities, including investments, operations, and financing.

Costing Methods

Various approaches used to calculate the cost of inventory and goods sold, such as First-In, First-Out (FIFO), Last-In, First-Out (LIFO), or average cost methods.

Periodic System

An inventory valuation method where inventory counting and valuation are performed at specific intervals.

Ending Inventory

The total cost of all the inventory a business has in stock at the end of an accounting period.