What would be a good example of a common cost that normally could NOT be assigned to products on a segmented income statement except on an arbitrary basis?
A) Product advertising outlays.
B) Salary of a corporation president.
C) Direct materials.
D) The product manager's salary.

Question

Quizplus · Accepted Answer

The salary of a corporation president is a common cost that cannot be assigned to products on a segmented income statement except on an arbitrary basis because it is an overhead cost that is not directly related to any specific product. It is generally allocated based on some arbitrary basis, such as sales or production volume. Direct materials and product advertising outlays are costs that can be directly traced to a specific product or product line, while the product manager's salary is a direct cost that can be allocated to a specific product or product line based on the manager's responsibilities.

What Would Be a Good Example of a Common Cost