Which of the Following Is the Most Appropriate Cost Allocation

question 38

Multiple Choice

Which of the following is the most appropriate cost allocation base for a purchasing department?

• A) Time spent speaking with other department heads on the telephone
• B) Hours of training provided to purchasing department employees
• C) Allocated costs of other departments
• D) Number of purchase requisitions

---

Definitions:

LIFO

Last In, First Out refers to an approach for evaluating inventory in which the items that were produced last are considered to be the first ones sold.

Weighted-Average Cost

A calculation used in inventory management and cost accounting that takes into account the varying costs of goods and determines an average cost for the goods sold.

Periodic Inventory System

An inventory system that updates inventory balances after a specific period, calculating COGS by a physical count.

Unit Cost

The calculated cost to produce one unit of product, taking into account all variable and fixed costs.