The practical capacity method of allocating costs is:

Question

Quizplus · Accepted Answer

The practical capacity method of allocating costs is based on the practical capacity supplied. It allocates costs based on the capacity available for the department to use, regardless of whether or not that capacity is fully used. This method reflects a more realistic approach to cost allocation than other methods that may allocate costs based on actual usage, which may fluctuate beyond the control of the department.

The Practical Capacity Method of Allocating Costs Is