Question

The adjusted allocation approach yields the benefits of:

A) timeliness and convenience of normal costing
B) allocation of of actual manufacturing overhead costs at the end of the year
C) Both a and b are correct.
D) Neither a nor b are correct.

Answer 1

The adjusted allocation approach enables businesses to benefit from timely costing during the year and accurate overhead allocation at the end of the year, making both options a and b correct.

Step-by-step explanation:

The adjusted allocation approach combines the benefits of both timeliness and convenience of normal costing with the precise allocation of actual manufacturing overhead costs at the end of the year. Therefore, the correct answer is C) Both a and b are correct. This approach allows businesses to apply overhead costs to production throughout the year using a predetermined rate, and then adjust at year-end to reflect the actual costs, ensuring that the benefits of both timely decision-making and accurate cost allocation are realized.