If a cost is a common cost of the segments on a segmented income statement, the cost should:
A)be allocated to the segments on the basis of segment sales.
B)not be allocated to the segments.
C)excluded from the income statement.
D)treated as a product cost rather than as a period cost.

Question

Quizplus · Accepted Answer

Common costs are not directly traceable to any particular business segment, so they should not be allocated to any segment. Therefore, the cost should not be allocated to the segments and remain as a general cost of the overall business.

If a Cost Is a Common Cost of the Segments