Departments are often used as cost pools when allocating support department costs because:
A) Many organizations already accumulate costs by department
B) Generally accepted accounting principles require it
C) All departments have easily identifiable allocation bases
D) Canadian income tax regulations require it

Question

Quizplus · Accepted Answer

Many organizations already accumulate costs by department, making it convenient to use departments as cost pools for allocating support department costs. This also allows for easier tracking and analysis of departmental expenses. Generally accepted accounting principles and Canadian income tax regulations do not require the use of departments as cost pools for allocating support department costs.

Departments Are Often Used as Cost Pools When Allocating Support