A Cost Allocation Base May Be Any of the Following

question 24

Multiple Choice

A cost allocation base may be any of the following except:

• A) a cost pool.
• B) a way to link indirect costs to a cost object.
• C) a cost driver.
• D) a non-financial quantity.

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Definitions:

Variable Costing

An accounting method that includes only variable production costs in the cost of goods sold, excluding fixed factory overhead.

Absorption Costing

An accounting method that assigns all manufacturing costs, including both fixed and variable, to products, fully capturing the cost of production.

Fixed Manufacturing Overhead

Regular, unchanged costs incurred during the manufacturing process, regardless of the level of output.

Variable Costing

A costing method that only includes variable production costs in product costs, excluding fixed manufacturing overhead.