When using the direct method why would companies choose to perform the allocation with predetermined rates?
A)To better communicate the often-forgotten cost of support services to department managers
B) To make the budgeting process easier for managers
C) To influence a department manager's hiring policies
D) To persuade company executives to cut costs

Question

When using the direct method why would companies choose to perform the allocation with predetermined rates? 
A)To better communicate the often-forgotten cost of support services to department managers
B) To make the budgeting process easier for managers
C) To influence a department manager's hiring policies
D) To persuade company executives to cut costs

Quizplus · Accepted Answer

Using predetermined rates allows companies to allocate support service costs to departments in a more systematic and consistent manner, and can also help to highlight the cost of these services to department managers. It does not necessarily impact budgeting, hiring policies, or cost-cutting initiatives.

When Using the Direct Method Why Would Companies Choose to Perform