The single-rate cost-allocation method may base the denominator choice on ________.
A) master-budget capacity utilization
B) fixed cost utilization
C) variable cost utilization
D) direct-cost utilization

Question

Quizplus · Accepted Answer

The single-rate cost-allocation method is based on a single cost driver that is used to allocate all costs to products or services. The denominator choice is typically based on master-budget capacity utilization, which represents the total capacity available in the budgeted period. This approach ensures that costs are allocated based on the available capacity, rather than on actual utilization, which can vary from period to period. This approach also helps to ensure that all costs are allocated to products or services, regardless of whether they are fixed or variable costs.

The Single-Rate Cost-Allocation Method May Base the Denominator Choice on ________