Which of the following is a disadvantage for using budgeted costs instead of actual costs for support department cost allocation?
A) Managers know their exact costs in advance and have no incentive to minimize use of services.
B) Budgeted costs do not reflect current usage, and so managers may overuse support services.
C) Allocated support department costs are not under the manager's control.
D) Support departments might be cut back because services are likely to be underused.

Question

Quizplus · Accepted Answer

Budgeted costs provide managers with a fixed cost figure in advance, which can reduce their incentive to minimize the use of support services since they are not directly affected by the actual costs incurred. This can lead to inefficiencies and higher costs for the organization.

Which of the Following Is a Disadvantage for Using Budgeted