Which of the following cost allocation methods would be used to determine the lowest price that could be quoted for a special order that would utilize idle capacity within a production area?
A)Job order
B)Process
C)Variable
D)Standard

Question

Quizplus · Accepted Answer

Variable cost allocation method is used when determining the lowest price for a special order that utilizes idle capacity within a production area. This is because variable costs increase with increased production, and in this case, the production level is not expected to change significantly. Using the variable cost allocation method would ensure that the special order covers only the variable costs associated with producing the goods, and not any fixed costs.

Which of the Following Cost Allocation Methods Would Be Used