Cost Accounting (15th Edition)

Published by Prentice Hall
ISBN 10: 0133428702
ISBN 13: 978-0-13342-870-4

Chapter 14 - Cost Allocation, Customer-Profitability Analysis, and Sales-Variance Analysis - Assignment Material - Questions - Page 578: 14-11

Answer

The number of cost pools a company should use when allocating costs to divisions, channels, and customers depends on the complexity of its operations and the level of detail required for decision-making. Generally, a company should use a number of cost pools that strike a balance between providing useful information for decision-making and avoiding unnecessary complexity. Typically, companies use a few broad cost pools to allocate costs effectively.

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