In cost allocation,R&D costs are used ________.
A) to provide information for economic decisions
B) to report to external parties when using generally accepted accounting principles
C) to calculate costs of a government contract
D) to calculate prime cost of a product

Question

Quizplus · Accepted Answer

R&D costs are typically indirect costs that cannot be traced to a specific product, therefore they are allocated to products or departments based on some predetermined allocation method. This helps provide relevant information for economic decisions such as pricing, product mix, and cost control. The other options (B, C, D) are possible applications of cost allocation but are more specific and limited in scope.

In Cost Allocation,R&D Costs Are Used ________