The advantage of allocating budgeted rather than actual service department costs is that
A)managers are not motivated to evaluate the charges.
B)only one cost pool is necessary.
C)service departments cannot pass on the costs of inefficiencies and waste.
D)this practice is acceptable under GAAP.

Question

Quizplus · Accepted Answer

Allocating budgeted rather than actual service department costs prevents service departments from passing on the costs of their inefficiencies and waste to the departments they serve. This encourages more efficient operation and cost control within service departments.

The Advantage of Allocating Budgeted Rather Than Actual Service Department