When determining the full costs of a specific product or service, if the costs cannot...

When full costs cannot be directly traced to a product or service, indirect costs must be allocated using a rational and systematic basis. The preferred method is to use a cause-and-effect relationship between the resource consumed and the output generated. This aligns with cost accounting principles under FASAB SFFAS No. 4 and managerial accounting frameworks.

Other options, such as direct labor or opportunity cost approaches, may be helpful in specific settings but do not meet the standard requirement for full cost allocation.

Relevant References:

FASAB SFFAS No. 4 – Managerial Cost Accounting Standards

OMB Circular A-136 – Full Cost Accounting

GAO Cost Estimating and Assessment Guide

Answer: D. a cause-and-effect relationship between resource costs and outputs