Question

To guide cost allocation decisions, the cause-and-effect criterion ________.

		A) is used less frequently than the other criteria
		B) is the primary criterion used in activity-based costing
		C) considers fairness as a matter of judgment rather than an operational criterion
		D) advocates allocating costs in proportion to the cost object's ability to bear costs allocated to it

Answer 1

The right answer choice will be "(B) is the primary criterion used in activity- based costing" To guide cost allocation decisions, the cause-and-effect criterion is the primary criterion used in activity-based costing.