When the cost pools are homogeneous which of the following will be true?
A) the number of needed cost pools will be more
B) the costs in the cost pool have a similar cause-and-effect or benefits-received relationship with the cost-allocation base
C) managers should not allocate both variable costs and costs that are fixed in the short-run
D) there will be a greater variety of cause-and-effect, benefits-received, or fair-and-equitable relationship with the cost-allocation base

Question

Quizplus · Accepted Answer

When the cost pools are homogeneous, it means that the costs in the cost pool have a similar cause-and-effect or benefits-received relationship with the cost-allocation base. Therefore, managers should allocate both variable costs and costs that are fixed in the short-run. However, the number of needed cost pools will be less, and there will be less variety in the cause-and-effect or benefits-received relationship with the cost-allocation base.

When the Cost Pools Are Homogeneous Which of the Following