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List four reasons why indirect costs are allocated.

List four reasons why indirect costs are allocated.

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Answer #1

four reasons why indirect costs are allocated are as follows:-

  • To predict the economic effects of planning and control decisions. for example, whether or not to accept a special order.
  • to motivate managers and employees
  • to measure the costs of inventory and cost of goods sold, to be reported in Financial Statements
  • to justify costs for pricing or reimbursement. to supports the costs reported to customers when making bids for jobs

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