Use the Information Below to Answer the Following Question(s)

question 16

Multiple Choice

Use the information below to answer the following question(s) .Low-Cost Rentals Ltd.incurred $60,000 of common fixed costs and $90,000 of common variable costs.Data are provided below for the capacity allowed and the capacity used. For both departments, common fixed costs are to be allocated on the basis of capacity available and common variable costs are to be allocated on the basis of capacity used.
-To discourage unnecessary use of a support department, management might

• A)not allocate any support department costs to user departments.
• B)allocate support department costs based upon user department usage.
• C)allocate a fixed amount of support department costs to each department regardless of use.
• D)issue memos on useful services provided by the support department.
• E)allocate only variable costs based on budgeted usage.

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Definitions:

Pollution

The contamination of the natural environment, leading to adverse effects on ecosystems and human health.

Marginal Social Cost

The extra expense society incurs from the production of an additional unit of a good or service.

Pollution

The act of introducing harmful substances into the environment, leading to negative changes.

Marginal Social Cost

The cost to society of producing one additional unit of a good or service, considering both private costs and externalities.