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 other support departments
D)there is more than one operating department

Question

Quizplus · Accepted Answer

When support departments provide reciprocal services to other support departments, it can be challenging to allocate costs accurately. This is because each department provides services to others, making it difficult to determine each department's actual usage. As a result, special cost-allocation techniques must be used to allocate costs fairly among the departments.

Special Cost-Allocation Problems Arise When