Pride Company is preparing a segmented income statement, subdivided into departments (billing, purchasing, and telemarketing).Which of the following choices correctly describes the accounting treatment of the ﬁrm's compensation cost for key executives (president and vice- presidents)?
A)The cost is charged to the departments.
B)The cost is not charged to the departments because, although easily traceable to the departments, it is not controllable at the
C)The cost is not charged to the departments because, although controllable at the departmental level, it is not easily traceable to the
D)The cost is not charged to the departments because it is both easily traceable to the departments and controllable by the
E)The cost is not charged to the departments because it is neither easily traceable to the departments nor controllable by the

Question

Quizplus · Accepted Answer

The compensation cost for key executives is typically not charged to departments because it is neither easily traceable to specific departments nor controllable by them.

Pride Company Is Preparing a Segmented Income Statement, Subdivided into Departments