A simple method used to allocate common costs is the:
I. Stand-alone cost allocation method
II. Incremental cost allocation method
III. Reciprocal method
A) I only
B) III only
C) I, II, and III
D) I and II only

Question

Quizplus · Accepted Answer

The stand-alone cost allocation method involves allocating common costs based on each individual department or product's usage of the cost driver. The incremental cost allocation method involves allocating common costs based on the difference in total costs with and without the department or product. Both of these methods are simple and easy to use. The reciprocal method, while more accurate, is more complex and time-consuming to use. Therefore, D is the best choice as it includes the two simpler methods.

A Simple Method Used to Allocate Common Costs Is The