Which cost-allocation criterion is appropriate when making an economic decision?
A)the fairness or equity criterion
B)the ability to bear criterion
C)the cause-and-effect criterion
D)All of these answers are correct.

Question

Quizplus · Accepted Answer

The cause-and-effect criterion is the most appropriate cost-allocation criterion when making an economic decision because it allocates costs to the activities that cause them. This criterion is based on the principle that the costs of an activity should be borne by the beneficiaries of that activity.

Which Cost-Allocation Criterion Is Appropriate When Making an Economic Decision