The Advantage of Allocating Budgeted Rather Than Actual Service Department

question 121

Multiple Choice

The advantage of allocating budgeted rather than actual service department costs is that

• A)managers are not motivated to evaluate the charges.
• B)only one cost pool is necessary.
• C)service departments cannot pass on the costs of inefficiencies and waste.
• D)this practice is acceptable under GAAP.

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Definitions:

Business Practices

Established methods or manners of operating within a business or industry.

Credit-Worthiness

An assessment of an individual's or entity's ability to repay borrowed money, often based on their financial history and current resources.

Merchants

Individuals or entities involved in the wholesale or retail sale of goods.

Monthly Payments

Regular payments made once a month, often used in the context of loans, leases, and other forms of financing.