Under dual cost allocation, variable costs are allocated based on the user departments of the support department's output:
A) long-run usage
B) short-run usage
C) long-run usage and short-run usage
D) neither the long- or short-run usage

Question

Quizplus · Accepted Answer

Dual cost allocation allocates variable costs based on the short-run usage of the support department's output. This method acknowledges that variable costs vary based on the level of output and therefore should be allocated based on the actual level of output used by the user departments in the short run.

Under Dual Cost Allocation, Variable Costs Are Allocated Based on the User