A reason for using capacity available instead of capacity used when allocating budgeted fixed costs from service departments to user 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) that the allocation methods to assign service department costs to producing departments are inaccurate
D) that the allocation methods to assign service department costs to producing departments are not available

Question

Quizplus · Accepted Answer

Using capacity available instead of capacity used allows for a more consistent and predictable allocation of fixed costs to user departments, regardless of their actual usage. This is especially important in the short run, when fluctuations in usage can have a significant impact on allocations.

A Reason for Using Capacity Available Instead of Capacity Used