Which of the following statements is true of the allocation of fixed support department costs?
A)It should be allocated only to other support departments of a firm.
B)It should be allocated only to the user departments making maximum use of support departments.
C)It should be allocated based on the practical capacity of user departments.
D)It should be allocated based on the direct labor hours used by support departments.

Question

Quizplus · Accepted Answer

Fixed support department costs should be allocated based on the practical capacity of user departments, reflecting a more equitable distribution of costs based on the potential use of the support services rather than actual usage or other less relevant bases.

Which of the Following Statements Is True of the Allocation