To avoid passing on inefficiencies of the support departments, support department costs should be allocated using:
A) an actual cost allocation rate
B) a budgeted cost allocation rate
C) only fixed costs per unit of service
D) only variable costs per unit of service

Question

Quizplus · Accepted Answer

Using a budgeted cost allocation rate helps in planning and controlling costs by allocating support department costs based on budgeted rates rather than actual rates, which can fluctuate and pass on inefficiencies to the production departments.

To Avoid Passing on Inefficiencies of the Support Departments, Support