When budgeted cost-allocations rates are used:
A)variations in actual usage by one division affect the costs allocated to other divisions
B)the manager of the supplier division bears the risk of unfavorable cost variances
C)user divisions pay for costs that exceed budgeted amounts
D)user divisions pay for inefficiencies of the supplier department

Question

Quizplus · Accepted Answer

When budgeted cost-allocation rates are used, the supplier division's manager bears the risk of unfavorable cost variances because the costs are predetermined and any actual cost differences are not passed on to the user divisions.

When Budgeted Cost-Allocations Rates Are Used