Special cost-allocation problems arise when ________.
A) support department costs exceed budgetary estimates
B) practical capacity is used as the allocation base
C) support departments provide reciprocal services to each other and operating departments
D) the same cost-allocation base is used among various support departments

Question

Quizplus · Accepted Answer

Reciprocal services create a loop in the cost allocation process, where costs are allocated from support departments to other support departments and to operating departments, and then back to the initial support departments, creating an endless loop that makes cost allocation more difficult.

Special Cost-Allocation Problems Arise When ________