Which of the following statements best describes cost allocation?
A)A company can maximize or minimize total company income by selecting different bases on which to allocate indirect costs.
B)A company should select an allocation base to raise or lower reported income on given products.
C)A company's total income will remain unchanged no matter how indirect costs are allocated.
D)A company,as a general rule,should allocate indirect costs randomly or based on an "ability-to-bear" criterion.

Question

Quizplus · Accepted Answer

Cost allocation does not change a company's total income; it only affects how costs are distributed across different departments or products. The total income of the company remains the same regardless of the allocation method used.

Which of the Following Statements Best Describes Cost Allocation