To identify costs that relate to a specific product,an allocation base should be chosen that
A)does not have a cause-and-effect relationship.
B)has a cause-and-effect relationship.
C)considers variable costs but not fixed costs.
D)considers direct material and direct labor but not manufacturing overheaD.

Question

Quizplus · Accepted Answer

An allocation base that has a cause-and-effect relationship with the product will help in accurately identifying the costs that are related to the specific product. This is because the allocation base used will be based on the cost driver that has a direct relationship to the production of the product. For example, the number of machine hours used in the production of the product can be used as the allocation base for allocating manufacturing overhead costs. This would have a cause-and-effect relationship with the product's production as the more machine hours used, the higher the manufacturing overhead costs.

To Identify Costs That Relate to a Specific Product,an Allocation