Consider the following statements about the two-stage cost allocation process.
i. Costs in various cost pools are distributed to all departments, including support and production departments.
ii. Support department costs are allocated to production departments.
iii. Costs are assigned to each production department that has worked on the product.
Which statement/s is/are correct?
A) i, ii and iii
B) i and iii
C) iii
D) ii

Question

Quizplus · Accepted Answer

In the two-stage cost allocation process, initially, costs are pooled and distributed across all departments (including both support and production departments). Then, in the second stage, the costs from the support departments are allocated to the production departments. Finally, costs are assigned to each production department based on their involvement with the product, making all statements correct.

Consider the Following Statements About the Two-Stage Cost Allocation Process