It is important that a standard rate rather than actual expenses be used to charge service department costs to producing departments so that:

Question

Quizplus · Accepted Answer

Using a standard rate ensures that any extra costs resulting from inefficient operations in service departments are absorbed by the service department rather than being passed on to the production departments. This encourages service departments to operate efficiently and helps to prevent overcharging of production departments. Options A, C, and D are incorrect because they are either unrelated or opposite to the benefits of using a standard rate.

It Is Important That a Standard Rate Rather Than Actual