Consider the Following Statements About Support Department Cost Allocations

question 65

Multiple Choice

Consider the following statements about support department cost allocations.i.The allocation of actual costs encourages support department managers to control the costs in their departments
Ii) When budgeted costs are allocated,any efficiency in support department operations are passed along to user departments.
Iii) The allocation of budgeted costs rather than actual costs gives an incentive for support department managers to control costs in their departments.Which statement/s is/are true?

• A) i
• B) ii
• C) i and ii
• D) iii

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Definitions:

Interest Income

Income earned from lending funds or depositing money in interest-bearing accounts.

Budgetary Control Accounts

Accounting tools used to compare actual financial performance with budgeted amounts, facilitating effective financial management and control.

Budgeted Expenditures

The estimated amount of money allocated for specific expenses in a future period as part of a budgeting process.

Budgeted Revenues

Estimated income that an organization forecasts to receive over a certain period according to its budget plan.