When investments in facilities are shared by different subunits in a firm

Question

When investments in facilities are shared by different subunits in a firm, allocation of the cost of these common facilities to sharing units should be determined by:

A. Reference to Generally Accepted Accounting Principles (GAAP).

B. Relative sales dollars generated by the various units.

C. The relative amount of use of the facilities, or demand for the facilities, by the various investment centers in the organization.

D. Special techniques prescribed by the American Institute of Certified Public Accountants (AICPA).

E. Some measure of current value (e.g., replacement cost).

Answer

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