Question

The disadvantage of pooling costs is that ti can lead to inaccurate results if pooled costs...

a. have similar cost drivers
b. are all fixed costs
c. have different cost drivers
d. are of different amounts

Answer 1

Pooling costs can lead to inaccurate results if pooled costs have different cost drivers.

Step-by-step explanation:

The disadvantage of pooling costs is that it can lead to inaccurate results if pooled costs have different cost drivers.

Cost drivers are the factors that cause costs to increase or decrease, such as the number of units produced, labor hours, or machine hours. If pooled costs have different cost drivers, combining them can result in misleading information about the costs of individual products or services.