When allocating central corporate support costs to products,companies often use revenues as the allocation base because ________.
A) revenues are the cost driver
B) revenues approximate the actual cost driver
C) revenues represent an " ability to bear" philosophy of cost allocation
D) revenues represent the actual usage of resources

Question

Quizplus · Accepted Answer

Allocating costs based on revenues represents the "ability to bear" philosophy of cost allocation, where products that generate higher revenues are assumed to have a higher ability to bear such costs. This method is commonly used in practice as it is simple and straightforward, even though it may not accurately reflect the actual usage of resources.

When Allocating Central Corporate Support Costs to Products,companies Often Use