Which of these is a limitation of allocating support department costs?
A) identifying appropriate cost pools
B) the subjective nature of the exercise
C) the possibility of managers mistakenly believing that allocated costs are variable
D) all of the above are limitations

Question

Quizplus · Accepted Answer

Identifying appropriate cost pools can be a limitation because it requires a thorough understanding of the activities and resources used by support departments. The subjective nature of the exercise can also be a limitation because managers may have different opinions on how costs should be allocated. Lastly, the possibility of managers mistakenly believing that allocated costs are variable is a limitation because it can lead to incorrect decision-making based on inaccurate cost information. Therefore, all three options are limitations of allocating support department costs.

Which of These Is a Limitation of Allocating Support Department