The systematic way of linking group of indirect cost to a cost object is classified as ___________?
Correct answer: D. cost allocation base
- A. linked allocation base
- B. direct allocation base
- C. indirect allocation base
- D. cost allocation base
Explanation
A cost allocation base is the measure used to systematically assign a pool of indirect costs to a cost object, such as labor hours or machine hours. Hence, option d is the appropriate term.
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About Cost Accounting
Cost accounting measures and analyses the cost of producing goods or providing services for planning, control and pricing decisions. It covers direct and indirect costs, fixed and variable costs, job and process costing, break-even analysis, marginal costing, overhead allocation, and the difference between product cost and period cost.
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