Which of the Following Is a Disadvantage of a Dual-Rate

question 38

Multiple Choice

Which of the following is a disadvantage of a dual-rate method?

• A) It allocates fixed costs on the basis of budgeted long-run usage may tempt some managers to underestimate their planned usage.
• B) It may lead operating department managers to make sub-optimal decisions that are in their own best interest.
• C) It allocates fixed and variable-cost pool using the same cost-allocation base, which will mislead managers in making decisions.
• D) It does not guide department managers to make decisions that benefit both the organization as a whole and each department.

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Definitions:

Organizational Resources

Assets, including human, financial, physical, and informational, that an organization possesses and can utilize to execute its strategies and achieve its objectives.

Opportunity Power

The ability to influence people or situations through the creation or control of opportunities.

Politically Correct

Language or behavior that is designed to avoid offense or disadvantage to members of particular groups in society.

Office Politics

The use of power and social networking within an organization to achieve changes that benefit the organization or individuals within it.