The Primary Reason to Use a Dual Rate Allocation System

question 93

True/False

The primary reason to use a dual rate allocation system is to focus a manager's performance evaluation on factors under the manager's direct control.

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Definitions:

Standard Costing Systems

A cost accounting method that compares actual costs to standard costs to help managers control business costs.

Variances

Differences between planned or expected financial outcomes and the actual results observed.

Performance Reports

Documented assessments that provide information on the performance of activities, processes, or strategies against planned objectives.

Sales Price Variance

The difference between the actual sales revenue received from a product and the expected revenue, based on the planned selling price and actual quantity sold.