Cost allocation is used to describe the assignment of indirect costs (e.g., rent, lease, overhead, insurance, taxes, and quality control) to particular cost objects (e.g., individual jobs, orders, a product, department, machine, or material). There are arguable issues associated with manner in which cost allocation is performed. Which of the following observations has not been identified as one of these issues?

Select one:

a.

cost estimates are often inaccurate, but are required for reimbursements and external reporting

b.

the allocation of overhead costs is more likely to penalize project performance in the project execution phase than in the initiation phase

c.

indirect costs are typically assumed to be incurred at a linear rate

d.

indirect costs may not be directly or easily traced to a specific object

e.

indirect costs often accounted for with definitive time periods (e.g., week or month), however costs may be incurred beyond these time periods

Given a repetitive task, if the time required to perform the task to produce the first unit of output is 5 minutes, how much time would you expect would be required to produce the 4th unit if the second unit of output required 4.5 minutes?

Select one:

a.

2.624 minutes

b.

3.281 minutes

c.

3.645 minutes

d.

Insufficient information is given to determine an answer

e.

4.050 minutes