To guide cost allocation decisions, the ability to bear criterion ________.
A) is the primary criterion used in activity-based costing
B) allocates cost among the beneficiaries in proportion to the benefits each receives.
C) results in subsidizing products that are not profitable
D) is used more frequently than any other criteria

Question

Quizplus · Accepted Answer

The ability to bear criterion often results in subsidizing products that are not profitable because it allocates costs based on the assumption that products with higher sales or margins can "bear" more of the overhead, rather than allocating costs based on actual cause-and-effect relationships.

To Guide Cost Allocation Decisions, the Ability to Bear Criterion