Asked by katira Gonzalez on May 28, 2024

verifed

Verified

When allocating support department costs, the costs that should be used are:

A) actual fixed costs and budgeted variable costs.
B) actual fixed costs and actual variable costs.
C) budgeted fixed costs and actual variable costs.
D) budgeted fixed costs and budgeted variable costs.

Support Department

A unit within an organization that provides essential services or support to the primary operations or production departments, not directly generating revenue.

Cost Allocations

The method of distributing indirect costs to various cost objects such as products, services, or departments.

Actual Costs

The true, realized expenses incurred during the production or delivery of goods and services.

  • Identify and differentiate between various costing methods like actual, budgeted, variable, and absorption costing.
verifed

Verified Answer

LG
Lindsay GallagherMay 29, 2024
Final Answer :
D
Explanation :
When allocating support department costs, budgeted fixed costs and budgeted variable costs should be used. This is because support department costs are usually indirect costs that cannot be directly traced to a product or service, and budgeted costs give a more accurate estimation of the amount of support a department will require for the period. Using actual costs may not reflect the support actually needed during the period, hence budgeted costs are the better option. Additionally, using both fixed and variable costs allows for a more accurate allocation based on the level of support required by each department.