Higherlevel performance reports should allocate both traceab

Higher-level performance reports should allocate both traceable and common fixed costs to lower departments.

Select one:

True

False

Solution

False

The Traceable Fixed Cost are specific to the department/product and will not be incurred if the department are shut down/closed. So cost are absorbed by the respective department/product only.

Common Fixed cost is incurred as a whole and is not expected to reduce if 1 department/ product is discontinued. So Common Fixed cost is distributed to lower departments.

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