WST Corporation Uses Actual Amounts to Calculate Support Department Cost

question 99

Multiple Choice

WST Corporation uses actual amounts to calculate support department cost allocation rates. A disadvantage of this practice is:

• A) Managers are held responsible for actual usage.
• B) Support charges are known in advance by managers.
• C) If one department uses much less of a support department's services than others, the support charge to remaining departments will increase to compensate.
• D) Managers cannot measure the value of support services used.

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