Allocation bases used in allocating support department costs:
A) Can be any kind of measure
B) Should be related to the services provided by the support department
C) Are usually based only on the direct costs of the departments
D) Are not cost drivers

Question

Quizplus · Accepted Answer

Allocation bases used in allocating support department costs should be related to the services provided by the support department, as this provides a more accurate reflection of the support department's usage by other departments. Using any kind of measure or only direct costs may not accurately reflect the level of support being provided. Allocating costs based on cost drivers is also important for accuracy, but that is not an option in the given choices.

Allocation Bases Used in Allocating Support Department Costs