Which of the following illustrates a purpose for allocating costs to cost objects?
A)To provide information to customers
B)To measure liabilities
C)To determine a selling price the market will bear
D)To motivate managers and employees

Question

Quizplus · Accepted Answer

Allocating costs to cost objects is typically done to assign costs to specific activities, products, or departments. This information can then be used to motivate managers and employees by providing a clear understanding of the costs associated with their areas of responsibility. It can also be used to identify opportunities for cost reduction and optimization. While cost allocation may indirectly impact selling prices, its primary purpose is not to determine the price that the market will bear. Similarly, while cost information may be shared with customers, this is not typically the primary purpose of cost allocation. Finally, cost allocation is not directly related to measuring liabilities.

Which of the Following Illustrates a Purpose for Allocating Costs