Which of the following statements concerning the allocation of indirect expenses to departments is true?
A) A departmental profit calculation should exclude expenses that the departmental manager has no control over.
B) When preparing departmental profit reports it is best to assume that the departments are independent businesses.
C) Different accountants will normally chose similar bases to allocate overhead costs to departments.
D) Accountants have developed methods that have completely removed the subjectivity in allocating indirect costs to departments.

Question

Quizplus · Accepted Answer

It is important to allocate indirect expenses to departments in a fair and reasonable manner. However, some expenses may not be within the control of the departmental manager, such as rent or insurance costs that are determined by upper management. Therefore, these expenses should be excluded when calculating departmental profit to provide a more accurate reflection of the department's performance.

Which of the Following Statements Concerning the Allocation of Indirect