A reason for using capacity available instead of capacity used when allocating fixed costs from service departments to producing departments is ________.
A)actual usage by user departments does not affect short run allocations to other user departments
B)actual usage by user departments does not affect long run allocations to other user departments
C)the allocation methods to assign service department costs to producing departments are inaccurate
D)the allocation methods to assign service department costs to producing departments are not available

Question

Quizplus · Accepted Answer

When using capacity available instead of capacity used, the short run allocations are not affected by the actual usage of the user departments. This is because in the short run, user departments cannot easily adjust their usage of service departments. Therefore, capacity available is a more accurate way to allocate fixed costs in the short run.

A Reason for Using Capacity Available Instead of Capacity Used