A difficult problem in calculating the total costs and expenses of a department is:
A) Determining the gross profit ratio.
B) Assigning direct costs to the department.
C) Assigning indirect expenses to the department.
D) Determining the amount of sales of the department.
E) Determining the direct expenses of the department.

Question

Quizplus · Accepted Answer

While all of the options could be challenging, determining indirect expenses is particularly difficult because these expenses are often shared across multiple departments or do not have a clear cause-and-effect relationship with a particular department's activities. This makes it tricky to determine exactly how much of these expenses should be allocated to a specific department.

A Difficult Problem in Calculating the Total Costs and Expenses