Many Companies Use the Dual-Cost Method of Cost Allocation

question 46

Essay

Many companies use the dual-cost method of cost allocation.
Required:
A. How does the dual-cost method work?
B. Is there any advantage of the dual-cost method over a method that uses a combined, lump-sum single rate? Briefly explain.

---

Definitions:

Growth Opportunities

Prospects or avenues for expansion and increased profit, typically in the context of businesses or career paths.

Business Portfolio Analysis

A method used by businesses to categorize their various products or business units to determine which should receive more or less investment.

Competitors

Entities that offer similar products or services within the same market and vie for the same customer base.