An assigned indirect cost differs from an allocated indirect cost in that:
A) An assigned cost can be attached to a cost object by way of an estimate, while the amount of an allocated cost attached to an object is entirely arbitrary.
B) Assigned costs are traceable; allocated costs are not.
C) Assigned costs can always be classified as manufacturing, while allocated costs are always associated with selling and administration.
D) Appropriate cost allocations always improve costing accuracy, unlike the estimates used to assign costs.

Question

Quizplus · Accepted Answer

Assigned indirect costs are estimated amounts that can be attached to a cost object, while allocated indirect costs involve distributing costs based on a chosen method, which can sometimes be arbitrary. Assigned costs use estimates to link them to cost objects, making them different from allocated costs, which are distributed based on a predetermined formula or method.

An Assigned Indirect Cost Differs from an Allocated Indirect Cost