What is established to collect operating expenses when two or more work centers share physical space, personnel, and supplies?

• A. Cost pool
• B. Sub-account
• C. Element of expense
• D. Functional account code

Answer: (A)

When several work centers share resources, you create a cost pool to collect those operating expenses into one place. This pool holds the overhead costs that can’t be traced to a single center, such as shared space, utilities, supplies, and common staff. By pooling these costs, you can allocate them to the individual work centers using an appropriate driver (like space, headcount, or hours), ensuring the shared expenses are accounted for fairly and consistently. The other options don’t serve this pooling purpose: a sub-account is merely a more detailed line within an account, an element of expense is the type of cost, and a functional account code categorizes the expense by function rather than by how shared costs are collected and allocated.