The Basic Difference Between a First-Stage Cost Allocation and a Second-Stage

question 72

Multiple Choice

The basic difference between a first-stage cost allocation and a second-stage cost allocation is that:

• A) cost pools are not used in first-stage cost allocations.
• B) predetermined overhead rates are used in first-stage cost allocations but not in second-stage cost allocations.
• C) the first stage prohibits firms from aligning the allocation of costs with the use of resources.
• D) when used in an ABC system, the first stage assigns costs to activities.

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Definitions:

Consideration

Consideration in contract law refers to something of value exchanged between parties as part of an agreement.

Illusory Promise

A statement that appears to be a promise but does not actually bind the party to any obligation, making it unenforceable as a contract.

Liquidated Debt

A debt or claim whose precise monetary value has been determined, acknowledged, or agreed upon by all involved parties.

Performance

The act of carrying out or accomplishing an action, task, or function.