1. In refining a cost system

1. total direct costs are unchanged because they can be traced in an economically feasible way to the product and traced costs are more accurate.
2. the costs are grouped in non-homogeneous pools.
3. the criterion of cause-and-effect is used to relate indirect costs to a factor that systematically links to a cost object.

the organization looks for cost-allocation bases that will provide a uniform spreading of indirect costs to each product