Question

Does increasing the number of​ indirect-cost pools guarantee an increase in the accuracy of product or service​ costs?

A.
​Yes, increasing the number of​ indirect-cost pools will always increase the homogeneity of the cost pools​ themselves, and​ will, in​ turn, improve the accuracy of the indirect costs allocated to product or service costs.
B.
​No, increasing the number of​ indirect-cost pools does not guarantee increased accuracy of product or service costs. If the existing cost pool is not​ homogeneous, accuracy will increase only if the increased cost pools themselves increase in homogeneity.
C.
​No, increasing the number of​ indirect-cost pools does not guarantee increased accuracy of product or service costs. If the existing cost pool is already​ homogeneous, increasing the number of cost pools will not increase accuracy.
D.
Both B. and C.

Answer 1

Increasing the number of indirect-cost pools does not automatically ensure more accurate product or service cost allocation. It only improves accuracy if the cost pools are more homogeneous as a result.The correct answer is B and C

Step-by-step explanation:

The student has asked if increasing the number of​ indirect-cost pools guarantees an increase in the accuracy of product or service​ costs.

The correct answer is B and C which, when combined, suggest that increasing the number of​ indirect-cost pools does not necessarily guarantee increased accuracy of product or service costs.

Accuracy improves only if the pools themselves become more homogeneous. If a cost pool is already homogenous, adding more cost pools will not necessarily enhance accuracy.The correct answer is B and C