When allocating support department costs, the costs that should be used are:
A) actual fixed costs and budgeted variable costs.
B) actual fixed costs and actual variable costs.
C) budgeted fixed costs and actual variable costs.
D) budgeted fixed costs and budgeted variable costs.

Question

Quizplus · Accepted Answer

When allocating support department costs, budgeted fixed costs and budgeted variable costs should be used. This is because support department costs are usually indirect costs that cannot be directly traced to a product or service, and budgeted costs give a more accurate estimation of the amount of support a department will require for the period. Using actual costs may not reflect the support actually needed during the period, hence budgeted costs are the better option. Additionally, using both fixed and variable costs allows for a more accurate allocation based on the level of support required by each department.

When Allocating Support Department Costs, the Costs That Should Be