For performance evaluation purposes, the variable costs of a service department should be charged to operating departments using:
A)the actual variable rate and the budgeted level of activity for the period.
B)the budgeted variable rate and the actual level of activity for the period.
C)the budgeted variable rate and the budgeted level of activity for the period.
D)the actual variable rate and the peak-period or long-run average servicing capacity.

Question

Quizplus · Accepted Answer

The budgeted variable rate and the actual level of activity for the period should be used to charge variable costs to operating departments. This approach ensures that the costs reflect the actual usage of services, while using a consistent rate for budgeting purposes.

For Performance Evaluation Purposes, the Variable Costs of a Service