Advantages of using budgeted values to calculate support department cost allocation rates include:
I. Managers know support department costs in advance
II. Managers are motivated to use support department services efficiently
III. Allocated support costs for the period are not affected by actual usage so managers have little incentive to minimize the use of support services
A) I and II only
B) I and III only
C) II and III only
D) I, II, and III

Question

Quizplus · Accepted Answer

I and II are advantages because knowing costs in advance helps in planning, and the motivation for efficient use of services comes from trying to stay within budgeted costs. III is not an advantage as it discourages minimizing the use of support services.

Advantages of Using Budgeted Values to Calculate Support Department Cost