When determining product costs,the last step in the traditional approach to cost allocation is ________.
A) divide costs in each producing department into direct costs and indirect costs
B) trace direct costs to products
C) select cost pools and cost allocation bases in each production department and assign indirect department costs to the appropriate cost pool
D) allocate the costs in each cost pool to the products in proportion to their usage of the related cost-allocation base

Question

Quizplus · Accepted Answer

The traditional approach to cost allocation involves dividing costs in each producing department into direct and indirect costs, tracing direct costs to products, selecting cost pools and allocation bases in each production department, assigning indirect department costs to the appropriate cost pool, and allocating the costs in each cost pool to the products in proportion to their usage of the related cost-allocation base. The last step is to allocate the costs in each cost pool to the products in proportion to their usage of the related cost-allocation base. Therefore, option D is the correct answer.

When Determining Product Costs,the Last Step in the Traditional Approach