Which of the following observations concerning the full-cost approach is NOT TRUE?
A) All costs are not allocated in all situations.
B) It requires that difficult-to-allocate costs be split on some basis.
C) Fixed costs are also allocated in some way.
D) It could lead to a different decision than the one suggested by the contribution margin approach.
E) Common costs are also allocated in some way.

Question

Quizplus · Accepted Answer

The full-cost approach requires the allocation of all costs, including direct and indirect costs, and common costs. Therefore, all costs must be allocated in all situations.

Which of the Following Observations Concerning the Full-Cost Approach Is