To guide cost allocation decisions, the fairness or equity criterion ________.
A) considers reasonableness as a matter of judgment rather than an operational criterion
B) allocates cost among the beneficiaries in proportion to the benefits each receives
C) is used more frequently than any other criteria
D) is the primary criterion used in activity-based costing

Question

Quizplus · Accepted Answer

The fairness or equity criterion considers reasonableness as a matter of judgment rather than an operational criterion, as fairness is subjective and varies among stakeholders.

To Guide Cost Allocation Decisions, the Fairness or Equity Criterion