In an income statement segmented by product line,a fixed expense that cannot be allocated among product lines on a cause-and-effect basis should be:
A)classified as a traceable fixed expense and not allocated.
B)allocated to the product lines on the basis of sales dollars.
C)allocated to the product lines on the basis of segment margin.
D)classified as a common fixed expense and not allocated.

Question

Quizplus · Accepted Answer

A fixed expense that cannot be allocated among product lines on a cause-and-effect basis is considered a common fixed expense and should not be allocated to any specific product line.

In an Income Statement Segmented by Product Line,a Fixed Expense