Homogeneous cost pool leads to which of the following?
A) more accurate costs of a given cost object
B) more resources being assigned to that cost object
C) the need for more cost drivers
D) the need for different cost allocation bases to allocate the costs

Question

Quizplus · Accepted Answer

Homogeneous cost pool means that costs with similar characteristics are grouped together. This leads to more accurate costs of a given cost object as the costs are allocated using the same cost allocation base. Hence, option A is the correct choice. Option B is not necessarily true as more resources may not be needed for a cost object just because of a homogeneous cost pool. Option C is not correct as more cost drivers are not needed, rather the same cost allocation base is used for all costs in the homogeneous pool. Option D is also not correct as a homogeneous cost pool uses the same cost allocation base for all costs.

Homogeneous Cost Pool Leads to Which of the Following