In Allocating Variable Costs to Products

question 98

Multiple Choice

In allocating variable costs to products,

• A)a volume-based cost driver should be used.
• B)direct labor hours should always be used as the allocation base.
• C)a company should use the same allocation base that it uses for fixed costs.
• D)a company should never use more than one cost driver.

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Definitions:

Beneficiary

An individual or entity chosen to receive benefits or assets from a will, insurance policy, or trust.

Coinsurance

An insurance policy provision under which the insurer and the insured share costs, after the deductible is met, according to a specific formula.

Insured

A person or entity covered by an insurance policy, protecting them against financial loss from specified risks.

Insurer

A company or entity that provides insurance coverage to policyholders in exchange for premiums.