Final answer:
The number of units can be used as an allocation base in cost accounting for assigning costs to cost objects. It is suitable for direct labor or materials directly related to the production process. The choice of an allocation base should reflect the way costs are actually incurred.
Step-by-step explanation:
Yes, you can use the number of units as an allocation base in cost accounting. The allocation base is a measure of activity that is used to assign costs to cost objects. The number of units produced or sold can often be a fair way to allocate costs, especially for direct labor or materials that are directly tied to the production process. For example, in a factory that produces shoes, it might make sense to allocate the cost of leather based on the number of shoes produced because there is a direct correspondence between the material used and the units produced.
In cost accounting, selecting the appropriate allocation base is crucial because it impacts the accuracy of the cost information. If the allocation base does not accurately reflect the way costs are incurred, then the resulting cost information can be misleading. Other common allocation bases include machine hours, labor hours, or square footage for allocating certain indirect costs (like utilities or rent) in situations where these measures are more closely related to cost incurrence.