Kizzie's Crepes Co. produces world famous crepes. The company's crepes are produced via its Mixing and Cooking activities, which both rely on the Janitorial and Maintenance activities. Kizzle's management knows the most practical driver of Janitorial costs is square feet, but is uncertain whether to allocate Maintenance costs based on asset value of production equipment, number of service calls, or machine hours. Kizzle's management estimates that the Cooking and Mixing activities each require about twice as much space as the Maintenance activity. 1. Identify the base for choosing the cost driver. a. The company needs to choose a driver that can be measured practically. b. The company needs to choose the driver that matches the department activity. c. The company needs to choose the driver that matches the support department function. d. All the above.

Kizzie's Crepes Co. produces world famous crepes. The company's crepes are produced via its Mixing and Cooking activities, which both rely on the Janitorial and Maintenance activities. Kizzle's management knows the most practical driver of Janitorial costs is square feet, but is uncertain whether to allocate Maintenance costs based on asset value of production equipment, number of service calls, or machine hours. Kizzle's management estimates that the Cooking and Mixing activities each require about twice as much space as the Maintenance activity. 1. Identify the base for choosing the cost driver. a. The company needs to choose a driver that can be measured practically. b. The company needs to choose the driver that matches the department activity. c. The company needs to choose the driver that matches the support department function. d. All the above.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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