Question

a, Proper Cost Assignment requires all of the followings except Assigning all allocable costs to appropriate segments b. Not allocating common costs to inappropriate segments Allocating common costs to inappropriate segments Using appropriate methods of allocation C. d Select one: a. Assigning all allocable costs to appropriate segments O b. Not allocating common costs to inappropriate segments Olc. Using appropriate methods of allocation Ord. Allocating common costs to inappropriate segments

Answer 1

D. Allocating common cost to Inappropriate segments

Because Cross-subsidization, or cost distortion, occurs when costs are improperly assigned among a company’s segment. Cross-subsidization can occur in either ways when companies unable  to trace costs directly to segments in those situations where it is a feasible to do so and when companies use inappropriate bases to allocate costs

so here allocating cost to inappropriate segments is in appropriate base to allocate cost so we conclude that answer is D.