Describe and explain the two types of fixed costs classifications that are found when a company prepares a segmented income statement as opposed to a variable costing income statement
On a segmented income statement, fixed costs are classified as either traceable or common. Traceable fixed costs can be traced or specifically allocated to a particular segment. They can be direct or indirect. The key determinant in whether it is a traceable fixed cost or not is if the fixed cost would go away should the segment be eliminated. Common fixed costs are indirect and benefit more than one segment. They would not go away if a particular segment were eliminated. Common fixed costs are generally not allocated to particular segments.
You might also like to view...
Lewis Company purchased a machine for $60,000. The machine has an estimated life of 20,000 hours and no salvage value. The entry to record the depreciation charge under the production method assuming that the machine was used for 4,000 hours is:
A) Depreciation Expense-Machinery 12,000 Accumulated Depreciation-Machinery 12,000 B) Depreciation Expense-Machinery 12,000 Machinery 12,000 C) Machinery 40,000 Accumulated Depreciation-Machinery 40,000 D) Machinery 60,000 Cash 60,000
The strategy of merging the interests of R&D and marketing is
a. consolidation. b. co-optation. c. collaboration. d. consistency. e. coercion.
During a recessionary period, which of the following economic behavior would be expected?
A. Consumers would use the majority of their discretionary income on groceries. B. Consumer spending would decrease. C. Consumer use of credit would increase. D. Taxes would increase nationally. E. Property values would jump dramatically.
Management by objective begins with setting goals
Indicate whether the statement is true or false.