A Disadvantage of Allocating Fixed Costs Using a Budgeted Rate

question 15

Multiple Choice

A disadvantage of allocating fixed costs using a budgeted rate and actual usage is that

• A)supplying division managers may be tempted underestimate usage.
• B)the allocation would capture the cause-and-effect relationship.
• C)variation in usage will result in variances that need to be managed.
• D)changes in one department's usage should not affect another department's allocation.
• E)some organizations offer rewards to managers who make accurate forecasts.

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Definitions:

Working Relationships

The interaction dynamics between colleagues within a professional environment.

Task Environment

The immediate external elements that affect an organization's performance, including competitors, customers, and suppliers.

Professional Bureaucracy

A type of organizational structure that is heavily reliant on the expertise and knowledge of professionals within the organization.

Direct Supervision

The practice of overseeing and guiding employees' work and tasks closely and in person.