Which of the following is a disadvantage of single-rate method?
A) It is very costly to implement.
B) It may lead operating department managers to make sub-optimal decisions that are in their own best interest.
C) It does not signal to department managers how variable costs and fixed costs behave differently.
D) It requires managers to distinguish variable costs from fixed costs, which is often a challenging task.

Question

Quizplus · Accepted Answer

The single-rate method may lead operating department managers to make sub-optimal decisions that are in their own best interest because they are only motivated to minimize costs within their own department, not necessarily for the overall organization.

Which of the Following Is a Disadvantage of Single-Rate Method