An advantage to using budgeted usage,rather than actual usage,for the allocation base is that
A)GAAP/IFRS requires it for comparability to previous years.
B)variable costs are lower.
C)management does not have to be accountable for actual costs since the system only deals with budgeted costs.
D)it is consistent with a short-run time horizon.
E)user divisions will know their allocated costs in advance.

Question

Quizplus · Accepted Answer

Using budgeted usage for the allocation base allows user divisions to know their allocated costs in advance, which can help with planning and budgeting. However, it is important to note that this approach does not necessarily reflect actual costs and may not be appropriate for long-term strategic planning or decision-making.

An Advantage to Using Budgeted Usage,rather Than Actual Usage,for the Allocation