Cost allocation encourages design of products that are simpler to manufacture and less costly to service.

Question

Quizplus · Accepted Answer

Cost allocation involves assigning indirect costs to products or services, and by doing so, it encourages companies to design products that are simpler and less costly to produce and maintain. By reducing indirect costs, companies can achieve a competitive advantage by offering lower prices or higher quality products at similar prices. Therefore, cost allocation can help companies optimize their product designs and manufacturing processes to achieve greater efficiency and profitability.

Cost Allocation Encourages Design of Products That Are Simpler to Manufacture