Question

The company is considering the use of a single – stage cost allocation process. Under what...

The company is considering the use of a single – stage cost allocation process. Under what conditions with this choice be justified?
A. The company has many service department but only one production department
B. The company produces a few products with similar characteristics in a few departments
C.The company has no service departments but many production department
D.The company produces a wide selection of products in a single production department
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Answer #1

The correct option is B . The company produces a few products with similar characteristics in a few department.

Single stage cost allocation is only possible in similar type of product which has almost similar process for production because in multiple variety of products there are multiple process and multiple cost centre. To determine actual cost we have to distribute cost at many stages in multiple process. So single stage allocation is only possible in similar type of product which require same number of process to produce.The variety of products should be less in single cost allocation process.

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