Question

TRUE OR FALSE: The two-stage cost allocation process allocates costs to multiple cost pools and then...

TRUE OR FALSE: The two-stage cost allocation process allocates costs to multiple cost pools and then to individual cost objects using different allocation bases.

TREU OR FALSE: It is important that cost management systems are designed using the cost-benefit principle so that the costs of gathering additional information are balanced against the benefits of that information.

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Answer #1

(1)

ANSWER: True

REASON:

In the first stage, the overhead costs of service/support departments are allocated to production departments. In the second stage, the overheads accumulated under production department are assigned to products based on a suitable basis.

(2)

ANSWER: True

REASON:

Cost-benefit analysis is fundamental to the adoption and design of cost management systems.

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