The practice of using only one base to allocate both fixed and variable costs is called:
A) Single-rate allocation
B) Activity-based allocation
C) Budgeted allocation
D) Direct allocation

Question

Quizplus · Accepted Answer

Single-rate allocation is the practice of using only one base to allocate both fixed and variable costs. This method is simple and easy to apply, but it may not accurately reflect the cost behavior of each activity or department. Activity-based allocation, on the other hand, allocates costs based on the specific activities or processes that drive costs, and is considered more accurate but is also more complex and time-consuming to implement. Budgeted allocation and direct allocation are not relevant to the given definition.

The Practice of Using Only One Base to Allocate Both