Which purpose of cost allocation is used to decide on the selling price for a customized product or service?
A)to provide information for economic decisions
B)to motivate managers and other employees
C)to justify costs
D)to measure income and assets for reporting to external parties
E)to compute reimbursement

Question

Quizplus · Accepted Answer

Cost allocation for the purpose of providing information for economic decisions is used to determine the cost components for a customized product or service, which is then used to make informed decisions on the selling price in order to achieve profitability. This helps businesses set prices that are competitive yet sufficient to cover costs and generate profits.

Which Purpose of Cost Allocation Is Used to Decide on the Selling