Which of the following is regarded as a purpose of cost allocation?
A) It helps in identifying the potential customers for a product.
B) It provides the profit margin earned.
C) It helps in maintaining decorum among managers.
D) It provides information for economic decisions.

Question

Quizplus · Accepted Answer

Cost allocation is primarily used to provide information for economic decisions. It helps in determining the profitability of products and services, identifying cost drivers, and making better decisions on pricing, production, and investment. While cost allocation may indirectly impact decorum among managers and provide insight into profit margins, these are not considered primary purposes of cost allocation. Identifying potential customers for a product is more related to marketing research and segmentation rather than cost allocation.

Which of the Following Is Regarded as a Purpose of Cost