The allocation bases for assigning indirect costs include:
A) Only physical bases.
B) Only cost bases.
C) Only value bases.
D) Only unit bases.
E) Any appropriate and reasonable bases.

Question

Quizplus · Accepted Answer

The most appropriate answer is E because allocation bases for indirect costs may vary depending on the nature of the costs and the organization. Therefore, any appropriate and reasonable basis may be used. Physical bases, cost bases, unit bases, and value bases may all be potential allocation bases depending on the situation.

The Allocation Bases for Assigning Indirect Costs Include