Budgeted Amounts of Allocation Bases, Rather Than Actual Amounts, Are

question 26

Multiple Choice

Budgeted amounts of allocation bases, rather than actual amounts, are preferable allocation bases because:

• A) when actual amounts are used the behaviour of one responsibility centre affects the costs allocated to other responsibility centres.
• B) budgeted amounts are known in advance, therefore costs are easier to allocate.
• C) the use of actual amounts could cause fluctuations in the prices charged for a company's products or services.
• D) budgeted amounts are known in advance, therefore costs are easier to allocate AND the use of actual amounts could cause fluctuations in the prices charged for a company's products or services.

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