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 or compute reimbursement
D)to measure income and assets for reporting to external parties

Question

Quizplus · Accepted Answer

Cost allocation for the purpose of providing information for economic decisions is used to determine the true costs of customized products or services in order to make informed pricing decisions. By allocating costs accurately, businesses can determine the profitability of their products or services and adjust pricing accordingly. This allows for effective decision-making in terms of pricing, marketing, and product development.

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