Managerial Financial Accounting Chapter 6 Practice Quiz

Managerial Financial Accounting Chapter 6 Practice Quiz -...

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Self Study, Question 1
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Correct! Cost allocation addresses and resolves numerous issues. Costs are allocated: to provide information useful for decision making. to reduce frivolous use of resources. to encourage evaluation of internally provided services. to calculate the "full cost" of products/services for GAAP reporting. All of the above are reasons to allocate costs. Self Study, Question 2 Correct! An important feature of the cost pool is that the costs within the pool increase due to a particular activity and are related in principle or concept. An important concern in forming a cost pool is to: avoid placing similar costs in the same pool.
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limit the number of costs that make up the pool. ensure that the costs in the pool are homogenous, or similar. None of the above. Self Study, Question 3 Correct! The requirement that objects must have some common characteristic, such as square feet occupied or machine hours, allows indirect costs to be applied uniformly to all cost objectives. Costs should be allocated when something measurable or detectable has occurred– the cause-and-effect relationship. Without this relationship, allocation events are arbitrary.
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This note was uploaded on 08/02/2011 for the course MGMT 425 taught by Professor Brown/lexner during the Spring '11 term at Kaplan University.

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Managerial Financial Accounting Chapter 6 Practice Quiz -...

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