What are some of the problems which the use of Common Costs raises for Cost of Service Pricing, particularly the Average Cost approach?
A) Rates based upon average or fully allocated cost makes it necessary to apportion common costs by some arbitrary means.
B) Motor carriers are structured such as to make allocation extremely difficult.
C) Rail carriers have difficulty defining their common costs as they have wide spread geographic operations
D) All transport firms have significant difficulty with cost concepts due the very nature of their operations

Question

Quizplus · Accepted Answer

Common costs need to be apportioned in some arbitrary way when using average or fully allocated cost, which can lead to inaccuracies in cost of service pricing.

What Are Some of the Problems Which the Use of Common