An advantage of using a practical capacity-based allocation rate is:
A)It does not change across products.
B)It spreads all capacity costs over budgeted, rather than actual, volume.
C)When there is idle capacity, capacity costs are spread over a smaller production volume.
D)It does not change across periods.
E)All of the above are advantages of using a practical capacity-based allocation rate.

Question

Quizplus · Accepted Answer

A practical capacity-based allocation rate is advantageous because it remains consistent across different periods, providing stability in cost allocation despite fluctuations in production volume or other factors.

An Advantage of Using a Practical Capacity-Based Allocation Rate Is