Fairmont Inc

Fairmont Inc. uses an accounting system that charges costs to the manager who has been delegated the authority to make decisions concerning the costs. For example, if the sales manager accepts a rush order that will result in higher than normal manufacturing costs, these additional costs are charged to the sales manager because the authority to accept or decline the rush order was given to the sales manager. This type of accounting system is known as:

A) operational budgeting.
B) absorption accounting.
C) contribution accounting.
D) responsibility accounting.

Correct Answer:

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