The Copy Department of Hernandez Hardware Is Budgeted to Incur

question 134

Multiple Choice

The Copy Department of Hernandez Hardware is budgeted to incur $30,000 per month in fixed costs plus a cost of $0.02 per copy.The company allocates copy costs to user departments as follows:
-Fixed costs are allocated as a lump sum based on budgeted fixed costs and estimated peak demand for each department.
-Variable costs are allocated based on the budgeted rate per copy times the department's actual usage.
Which of the following is an advantage of this allocation scheme over allocating all actual service costs based on actual usage?

• A)Departments that use copy services are charged for cost overruns in the copy department.
• B)The amount charged to a particular user department is affected by the number of copies used by another department.
• C)Managers in departments that use services pay for the fixed costs that fluctuate based on their changing needs.
• D)Managers are charged for the activities they use.

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Definitions:

Glycolysis

Glycolysis is a metabolic pathway that breaks down glucose into pyruvate, releasing energy and pyruvic acid as a byproduct.

Citric Acid Cycle

A key metabolic pathway that integrates the energy from carbohydrates, fats, and proteins into usable energy in the form of ATP, also known as the Krebs cycle.

Preparatory Reaction

A phase or set of actions taken in anticipation of a foreseeable event or situation to ensure readiness.

Cellular Respiration

The metabolic process by which cells produce energy in the form of ATP from glucose.