To guide cost allocation decisions, the benefits-received criterion ________.
A) generally uses the cost driver as the cost allocation base
B) advocates allocating costs in proportion to the cost object's ability to bear costs allocated to it
C) is the primarily used criterion in activity-based costing
D) may use an allocation base of division revenues to allocate advertising costs

Question

Quizplus · Accepted Answer

The benefits-received criterion may use an allocation base of division revenues to allocate advertising costs. This criterion focuses on allocating costs to the products or services that directly receive the benefits of those costs. In this case, the division that generates the most revenue from the advertising would receive a higher allocation of the costs.

To Guide Cost Allocation Decisions, the Benefits-Received Criterion ________