Methods that have been used to allocate nontraceable expenses to segments include all the following ratios except:

Question

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Nontraceable expenses are typically allocated based on factors that can directly relate the expense to the segment's operations or financial performance. Ratios such as segment revenues to total enterprise revenues, segment total payrolls to enterprise total payrolls, and segment average plant assets and inventories to enterprise average plant assets and inventories are common methods because they reflect the segment's use of resources or its contribution to the company. However, segment liabilities to total enterprise liabilities is not a standard method for allocating nontraceable expenses, as liabilities do not directly reflect operational activities or resource consumption in the same way that revenues, payrolls, or assets do.

Methods That Have Been Used to Allocate Nontraceable Expenses to Segments