Which of the following guidelines must be considered while determining the basis to be used to allocate support department costs?
A)Guideline of revenue generation
B)Guideline of goal congruence
C)Guideline of profit maximization
D)Guideline of cause and effect

Question

Quizplus · Accepted Answer

The guideline that must be considered while determining the basis to be used to allocate support department costs is the guideline of cause and effect. This implies that the costs incurred by support departments should be allocated to the operating departments that directly cause those costs to be incurred. This is the most logical and accurate way to allocate support department costs. The other guidelines such as revenue generation, goal congruence, and profit maximization may not necessarily result in an accurate allocation of support department costs.

Which of the Following Guidelines Must Be Considered While Determining