True or false: Standard rules exist to help managers identify appropriate allocation bases.True false question.TrueFalse

This statement is True.

Explanation:

Standard rules or guidelines help managers determine appropriate allocation bases for assigning indirect costs to products, departments, or projects. Allocation bases are essential for cost accounting and management because they ensure that costs are assigned in a systematic and equitable manner. Common allocation bases include direct labor hours, machine hours, direct materials used, or percentage of sales. The choice of an appropriate allocation base can significantly affect the financial statements and performance evaluations of an organization.

Furthermore, managers typically take into account factors such as the nature of the costs being allocated, the operational activities of the organization, and the relevant cost behavior when selecting the most suitable basis. These standard rules facilitate consistency and comparability in financial reporting and decision-making.

In summary, having structured guidelines enables better management of costs which is vital for strategic planning and profit maximization.