Which of the following is TRUE concerning selecting a cost-allocation base in an ABC system?
A)Cost-allocation bases are not relevant in defining the number of activity pools.
B)All costs can be directly identified with a specific activity.
C)The allocation base chosen may be constrained by the availability of reliable data.
D)Costs may need to be allocated to services first, before the costs of services can be allocated to activities.
E)Output unit-level costs cannot be related to a cost-allocation base.

Question

Quizplus · Accepted Answer

The allocation base chosen in an ABC system may be limited by the availability of reliable data. Choice A is incorrect because cost-allocation bases are integral to defining activity pools. Choice B is incorrect because not all costs can be directly attributed to a specific activity. Choice D is incorrect because costs are typically allocated to activities before being allocated to services. Choice E is incorrect because output unit-level costs are often related to a cost-allocation base.

Which of the Following Is TRUE Concerning Selecting a Cost-Allocation