The primary reason to use a dual rate allocation system is to focus a manager's performance evaluation on factors under the manager's direct control.

Question

Quizplus · Accepted Answer

A dual rate allocation system can separate fixed and variable costs, allowing managers to be evaluated on their control over variable costs. This helps to focus their attention on factors such as efficient resource utilization and cost reduction. Therefore, the allocation reflects the cost behavior and can be used for performance evaluation purposes.

The Primary Reason to Use a Dual Rate Allocation System