1. Choose from among the following terms, and fill in the blanks for the subsequent sentences.

artificial cost pools		direct
core operating division		economies of scale
cause and effect		stand-alone cost allocation method
step / sequential		reciprocal
price taker		dual-rate
common cost		ability to bear
value leadership		benefits provided
core divisions		incremental cost allocation method

1. The ________________ method is an improvement over the ________________ method of applying support costs, but it still only reports the flow of support departments to one another in one direction. The __________________ method is considered the theoretically best approach to allocating support department costs.

2. A ___________________ arises when two or more users share benefits from consuming a corporate resource. There are two ways to recognize proportional cost and benefit. The _________________________ defines each cost object as if it were the only output. The _________________________ ranks those who share in benefits from incurring the total common cost pool from high to low. The highest ranked is the primary party who bears most of the total shared cost. The remaining incremental parties share the difference of the total common cost pool minus the costs allocated to the primary party ________________________ and ____________________________ are two criteria to help guide cost allocation decisions.

Answer rating: 100% (QA)

1 The step sequential approach of applying support expenses is an improvement over the Direct ... View the full answer