When individual activities within a cost pool have a similar relationship with the cost driver, which of the following could be said about the cost pool?
A) the costs accumulated in the cost pool are not used for customer-profitability analysis
B) there is a need for need multiple cost drivers to allocate costs from the pool to customers
C) the cost pool is considered a homogeneous cost pool
D) the cost pool is considered contains only direct variable costs

Question

Quizplus · Accepted Answer

When individual activities within a cost pool have a similar relationship with the cost driver, the cost pool is considered a homogeneous cost pool. This means that the costs accumulated in the cost pool have similar characteristics and can be allocated using a single cost driver. This makes it easier to allocate costs to customers and perform customer-profitability analysis. There is no need for multiple cost drivers or the assumption that the cost pool only contains direct variable costs.

When Individual Activities Within a Cost Pool Have a Similar