Under the traditional approach to cost allocation,which of the following steps is NOT used in allocating costs to products?
A) Divide the costs in each producing department, including allocated costs, into direct costs and indirect costs.
B) Trace the direct costs to the appropriate products.
C) Select cost pools and cost-allocation bases in each producing department and assign all indirect costs to the appropriate cost pool.
D) Collect relevant data concerning costs and the physical flow of cost-allocation base units among resources and activities.

Question

Quizplus · Accepted Answer

The traditional approach to cost allocation involves four steps: (1) identify the direct and indirect costs in each producing department, (2) select cost pools and cost allocation bases, (3) assign all indirect costs to the appropriate cost pool, and (4) trace the cost pools to the appropriate products or services. Collecting relevant data concerning costs and the physical flow of cost allocation base units among resources and activities is part of the fourth step, thus it is a step used in allocating costs to products.

Under the Traditional Approach to Cost Allocation,which of the Following