identify potential problems with cost allocation

Question

Question

business accounting

Answer 1

Answer #1

Cost allocation means apportionment of indirect expenses(Overheads) to products/goods produced.

Potential Problems with Cost Allocation:

1. Inaccurate cost information of Overheads

2. Leads to differences in pricing of final products.

3. Effects decision making capacity of management

4. Lack of basis of cost allocation

Answer 2

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