What Should Determine Whether an Allocation Base Is a Good

question 46

Multiple Choice

What should determine whether an allocation base is a good cost driver in a service organisation?

• A) Whether or not it satisfactorily links to the service cost object
• B) Whether or not it links the service cost to the service cost object
• C) Whether or not the base can be measured with absolute accuracy
• D) Whether or not the service cost being allocated is large

---

Definitions:

Abstract Thought

The ability to think about objects, principles, and ideas that are not physically present, a key component of higher-level cognition.

Conservation

In cognitive development, the understanding that properties such as volume, mass, and number remain the same despite changes in the forms or appearances of objects.

Quantity

A property that exists as magnitude or multitude, referring to the amount or number of a material or immaterial thing.

Schemas

Cognitive frameworks or concepts that help individuals organize and interpret information from the world around them.