Budgeted amounts of allocation bases, rather than actual amounts, are preferable allocation bases because:
A) when actual amounts are used the behaviour of one responsibility centre affects the costs allocated to other responsibility centres.
B) budgeted amounts are known in advance, therefore costs are easier to allocate.
C) the use of actual amounts could cause fluctuations in the prices charged for a company's products or services.
D) budgeted amounts are known in advance, therefore costs are easier to allocate AND the use of actual amounts could cause fluctuations in the prices charged for a company's products or services.

Question

Quizplus · Accepted Answer

Using budgeted amounts prevents the behavior of one responsibility center from affecting the costs allocated to others, ensuring more stable and predictable allocations.

Budgeted Amounts of Allocation Bases, Rather Than Actual Amounts, Are