Fixed support department costs should be allocated based on

Question

Quizplus · Accepted Answer

Fixed support department costs should be allocated based on the practical capacity of user departments because it reflects the maximum amount of work that the user departments could theoretically handle, and therefore the maximum amount of support they could require from the support department. Allocating costs based on actual or budgeted usage may unfairly penalize or reward user departments for factors outside their control, such as unexpected fluctuations in demand or changes in budget priorities.

Fixed Support Department Costs Should Be Allocated Based on