True or False. The standminus-alone cost allocation method ranks the individual users of a cost object in order of users most responsible for a common cost and then uses these rankings to allocate the costs among the users.

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Business

Taniyah Love

25 July, 20:56

True or False. The standminus-alone cost allocation method ranks the individual users of a cost object in order of users most responsible for a common cost and then uses these rankings to allocate the costs among the users.

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Bradley Meadows · Answer 1

False

Explanation:

It is 'Incremental cost allocation method' that ranks the individual users of a cost object in order of users most responsible for a common cost (the most responsible will be primary user) and then uses these rankings to allocate the costs among the users (incremental users).

Stand-alone cost allocation method allocates cost proportionately among all users based on a basis which relates to each users proportion of the total. For example the basis could be proportion of sales of responsibility centers to total sales of organization.