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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