When assigning indirect costs to a cost object,an ideal cost-allocation base measures ________.
A) the proportion of indirect costs to direct costs
B) the extent a particular cost is caused by a cost object
C) multiple cost drivers
D) the proportion of direct costs to indirect costs

Question

Quizplus · Accepted Answer

An ideal cost-allocation base measures the extent a particular cost is caused by a cost object. This means that the cost-allocation base should accurately reflect the usage or consumption of the indirect costs by the cost object. It should be a plausible cause-and-effect relationship between the cost allocation base and the indirect cost being allocated. Therefore, this option is the best choice among the given choices.

When Assigning Indirect Costs to a Cost Object,an Ideal Cost-Allocation