Question

1

Which of the following illustrates a purpose for allocating costs to cost objects?

A) to defer income and reduce taxes payable

B) to determine employee benefit costs

C) to motivate employees

D) to provide information for economic decisions

e) to reduce competition

2

The belief that corporate division with higher sales out to be allocated more of the company's advertising costs because it must of derived more benefit from the expenditures then a division with lower sales, is an example of which criteria for cost allocations decisions

A) fairness and equality

B) benefits receivied

C) cause and effect

D) ability to bear

E) benefits expended

3

Which cost allocation method differentiates between variable and fixed costs?

A) Heterogenous method

B) Single-rate method

C) variable method

D) Dual rate method

E) fixed rate method

Answer 1

1.D.To provide information for economic decisions.

Explanation:-The basis used to allocate costs to costs objects is an Activity Based Costing System.The purpose of the same is to provide information for economic decisions.

2.The belief that the corporate division with higher sales out to be allocated more of the company's advertising costs because it must have derived more benefit from the expenditures then a division with lower sales is an example of B)Benefits received criteria for cost allocation decisions.

3.D.Dual rate method differentiates between variable and fixed costs.