Each cost pool is distributed to each responsibility centre in:
A) proportion to that centre's relative amount of allocation base.
B) proportion to that centre's relative amount of direct cost.
C) proportion to that centre's relative amount of liabilities.
D) proportion to that centre's relative amount of profit.

Question

Quizplus · Accepted Answer

Cost pools are allocated based on the allocation base, which is usually a measure of the activity that drives the cost in question. Therefore, the cost pool is distributed proportionally according to each responsibility centre's relative amount of allocation base.

Each Cost Pool Is Distributed to Each Responsibility Centre In