A company has recently deployed Microsoft Dynamics 365 Finance.You have been hired as a Functional Consultant.
Your role will include the management of the Dynamics 365 Finance system and to provide training for members of the Accounts team.
You are providing training on the cost accounting module in the Dynamics 365 Finance system.
Which of the following statements describes the allocation base?
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A. B. C. D.A.
https://docs.microsoft.com/en-us/dynamics365/unified-operations/financials/cost-accounting/terms-cost-accountingIn cost accounting, an allocation base is a measure or factor that is used to allocate or distribute indirect costs to specific cost objects, such as products, services, departments, or projects. The allocation base is used to determine how much of a particular cost should be allocated to each cost object.
Option A is a description of an activity-based costing system, where costs are allocated based on the activities that drive them, such as machine hours, kilowatt hours, or square footage. This is not a description of the allocation base.
Option B is a description of a cost accounting system that defines how costs are measured and reported. While the cost element dimension is a key part of a cost accounting system, the calendar and currency dimensions are not related to the allocation base.
Option C is a description of a cost tracking function that categorizes costs into different types, such as direct costs, indirect costs, fixed costs, or variable costs. While cost tracking is an important part of cost accounting, it is not directly related to the allocation base.
Option D is a correct definition of an allocation base, as it refers to how costs are classified based on their behavior in relation to key business activities. In this approach, costs are classified as either fixed or variable, depending on whether they remain constant or change in relation to changes in the activity level of the cost object.
For example, if the allocation base is machine hours, fixed costs such as rent or depreciation will be allocated based on the number of hours the machines are used, while variable costs such as electricity or maintenance will be allocated based on the actual usage of the machines.
Therefore, the correct answer is D.