_____ should be used to allocate fixed costs.
A)Actual fraction of capacity used x total budgeted fixed costs
B)Budgeted fraction of capacity available for use x total budgeted fixed costs
C)Actual fraction of capacity used x actual fixed costs
D)Budgeted fraction of capacity available for use x actual fixed costs

Question

Quizplus · Accepted Answer

Allocating fixed costs based on the budgeted fraction of capacity available for use ensures that the costs are spread out evenly across the expected level of activity. Using actual fraction of capacity used or actual fixed costs may lead to over or under allocation of costs.

_____ Should Be Used to Allocate Fixed Costs