Explore BrainMass

Explore BrainMass

    Avoid arbitrary cost allocations by not allocating any costs

    This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

    A critic of cost allocation noted, "you can avoid arbitrary cost allocations by not allocating any costs." Please explain.

    © BrainMass Inc. brainmass.com June 4, 2020, 3:26 am ad1c9bdddf

    Solution Preview

    A quote after my own heart!

    There is not way to allocate that doesn't include a decision. Why? Because if you cannot assign a cost directly to the product, you have to "decide" how to do it another way. That decision may have great support and your best thinking, but it is never obvious.

    Example: The cost of the bricks in home building. This is easy. No allocating. Why? We know exactly where the bricks went (which house, which delivery). ...

    Solution Summary

    Your tutorial is 304 words and gives two examples to illustrate.