Managers need allocation bases when they:
I. Allocate support department costs to operating departments
II. Trace direct costs to products
III. Trace direct labour to products
A) I only
B) I and II only
C) I and III only
D) I, II, and III

Question

Quizplus · Accepted Answer

Allocation bases are primarily used for allocating indirect costs, such as support department costs, to operating departments. Direct costs, including direct labor, are traced directly to products without the need for an allocation base.

Managers Need Allocation Bases When They