Costs May Be Allocated to a Product or Activity for Many

Multiple Choice

Costs may be allocated to a product or activity for many purposes, but care must be exercised when using allocated costs because:

A) direct costs identified with the product or activity may not be accurately assigned.
B) fixed costs will change in total if the volume of activity changes.
C) all costs may not have been allocated to the product or activity.
D) arbitrarily allocated costs may not behave in the way assumed in the allocation method.