When the dual-rate method is used,cost-allocation bases must be chosen for both the variable-cost and fixed-cost pools

Question

Quizplus · Accepted Answer

The dual-rate method requires separate cost-allocation bases for variable and fixed costs. This is because the fixed costs are allocated based on the level of capacity utilization while the variable costs are allocated based on the level of usage of the cost-allocation base. Therefore, both costs must have their respective cost-allocation bases chosen.

When the Dual-Rate Method Is Used,cost-Allocation Bases Must Be Chosen