Cost Accounting A Managerial Emphasis Study Set 1
Quiz 14: Period Cost Allocation
The Stand-Alone Method of Allocating Common Costs Emphasizes Fairness and Equity
The stand-alone method of allocating common costs emphasizes fairness and equity among users.
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Under the incremental method, the first incremental user usually receives the highest allocation of the common costs.
Without explicit written cost-plus contracts, producer costs can be passed on to the buyer.
If the government wants to contract a very large scale project with significant uncertainty about what the final cost will be, often a cost-plus contract is awarded to attract qualified contractors who may otherwise not be willing to accept the risks inherent in a guaranteed bid price.
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