Question

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.

Answer 1

False

Step-by-step 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.