A company is considering the use of a single-stage cost allocation process. Under what conditions would this choice be justified?
A) The company has many service departments but only one production department.
B) The company produces a few products with similar characteristics in a few departments.
C) The company has no service departments but many production departments.
D) The company produces a wide selection of differing products.

Question

Quizplus · Accepted Answer

A single-stage cost allocation process is justified when a company produces a few products with similar characteristics, as it simplifies the allocation of costs without significantly distorting product costs.

A Company Is Considering the Use of a Single-Stage Cost