To avoid passing on inefficiencies of the support departments, support department costs should be allocated using:
A) a budgeted cost allocation rate
B) an actual cost allocation rate
C) only fixed costs per unit of service
D) only variable costs per unit of service

Question

Quizplus · Accepted Answer

Using a budgeted cost allocation rate allows for a more accurate allocation of support department costs, as it takes into account both fixed and variable costs and is calculated based on projected costs for the period. An actual cost allocation rate would not account for any changes in costs during the period, which could result in incorrect allocations. Allocating only fixed or variable costs per unit of service would not accurately reflect the total cost of the support department's services.

To Avoid Passing on Inefficiencies of the Support Departments, Support