Under the stand-alone method of allocating common costs:
A)a ranking is used to allocate costs among the users
B)disputes can arise over who is the primary user
C)each party bears a proportionate share of the total costs in relation to their individual stand-alone costs
D)an incentive is created to be the first-ranked user

Question

Quizplus · Accepted Answer

Under the stand-alone method of allocating common costs, each party bears a proportionate share of the total costs in relation to their individual stand-alone costs. This method is considered fair as it charges each user based on their individual usage, rather than a ranking or subjective interpretation of who the primary user is. Disputes over who is the primary user and incentives to be the first-ranked user are not relevant under this method of cost allocation.

Under the Stand-Alone Method of Allocating Common Costs