Which of the following is the overriding concern in forming a cost pool?
A)To ensure that there are no variable costs in the cost pool
B)To ensure that the total amount in the cost pool is less than the direct costs for the product
C)To ensure that only costs which have been budgeted are included in the cost pool
D)To ensure the costs in the pool are homogeneous or similar

Question

Quizplus · Accepted Answer

The overriding concern in forming a cost pool is to ensure that the costs in the pool are homogeneous or similar. This means that costs that are related to the same activity or function should be grouped together in the same cost pool. This allows for more accurate allocation of costs to products or services, leading to better decision making. The other options listed do not accurately reflect the primary concern in forming a cost pool.

Which of the Following Is the Overriding Concern in Forming