To Decide the Type and Number of Cost Pools to Use

question 6

Multiple Choice

To decide the type and number of cost pools to use for support cost allocation, managers should consider the:

• A) Reasons for allocating support department costs
• B) Ability of operating departments to bear the costs
• C) Method they plan to use for the allocation
• D) Allocation base

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Definitions:

Strategy

A plan of action designed to achieve a long-term or overall aim.

Total Cost Concept

An accounting approach that includes all costs - direct and indirect - associated with producing a good or service.

Government Agencies

Official organizations at the federal, state, or local level that administer and oversee specific functions or areas of public interest.

Product Pricing

The process of determining the financial value at which a product will be sold to consumers, balancing cost, demand, and profit objectives.