Companies that want to calculate the full cost of products must allocate all corporate costs to indirect-cost pools of divisions.

Question

Quizplus · Accepted Answer

This statement is true in the context of activity-based costing (ABC), as it involves allocating all corporate costs to indirect-cost pools of divisions in order to calculate the full cost of products. However, in traditional costing systems, only direct costs are allocated to products, and indirect costs may be allocated based on a predetermined rate or a single cost pool.

Companies That Want to Calculate the Full Cost of Products