When allocating service department costs, companies should use actual costs rather than budgeted costs, and separate rates for variable and fixed costs.

Question

Quizplus · Accepted Answer

Companies often use budgeted costs rather than actual costs for more predictable and stable chargebacks, and they may combine variable and fixed costs into a single rate for simplicity, although separating them can provide more accurate cost allocation.

When Allocating Service Department Costs, Companies Should Use Actual Costs