Cost allocation is ________.
A) the process of tracking both direct and indirect costs associated with a cost object
B) the process of determining the opportunity cost of a cost object chosen
C) the assignment of indirect costs to the chosen cost object
D) made based on material acquisition document

Question

Quizplus · Accepted Answer

Cost allocation is the assignment of indirect costs to a chosen cost object. It is the process of assigning costs to specific activities or cost drivers, which are then used to assign costs to cost objects such as products, services, or departments. Cost allocation is used to allocate indirect costs, which cannot be traced directly to a specific cost object, to the chosen cost object. Therefore, option C is the correct answer.

Cost Allocation Is ________