GAAP allows companies to choose between time-based, activity, group, or composite cost allocation methods, but once the method is chosen it must be applied consistently over time, this ensures that financial information is comparable.

Question

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GAAP does allow for companies to choose between several cost allocation methods, but once a method is chosen it must be consistently applied to ensure comparability of financial information.

GAAP Allows Companies to Choose Between Time-Based, Activity, Group, or Composite