A cost-allocation base is a necessary element when using a strategy that will refine a costing system.

Question

Quizplus · Accepted Answer

A cost-allocation base is a necessary element in refinements to a costing system as it is used to allocate the costs from a pool to a particular product or service. This enables the determination of accurate product or service costs, which can be used to set prices and make decisions about resource allocation. Therefore, without a cost-allocation base, a costing system cannot be refined accurately.

A Cost-Allocation Base Is a Necessary Element When Using a Strategy