Question: Why is using sales dollars as an allocation base usually a poor choice for allocating fixed costs to operating departments?

Why is using sales dollars as an allocation base usually a poor choice for allocating fixed costs to operating departments?

Step by Step Solution

★★★★★

3.31 Rating (177 Votes )

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock

Sales dollars are often a very poor base for allocating costs because sales dolla... View full answer

blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Students Have Also Explored These Related Managerial Accounting 17th Questions!

Q:

Allocating service centers costs to operating departments step method Shepard Consulting, LLP, has three operating departments: tax, estate planning, and small business. The companys internal...

Q:

Why are variable costs usually more relevant than fixed costs in short-term decision making?

Q:

Allocation of indirect costs to various departments can alter the departmental profit. Stop Company manufactures plates for drum brakes. To make the brake plate, three departments are required:...

Q:

"Our workers are all under labor contracts; therefore, our labor rate variance is bound to be zero." Discuss. Should standards be used to identify who to blame for problems? Why or why not, explain...

Q:

What is meant by the term decentralization? What benefits result from decentralization? Distinguish between a cost center, a profit center, and an investment center. What is meant by the terms margin...

Q:

11-9 Why should a service department's budgeted costs, rather than its actual costs, be charged to operating departments? Why'is using sales dollars as an allocation base usually a poor choice for...

Q:

Why is using sales dollars as an allocation base usually a poor choice for allocating fixed costs to operating departments?

Q:

Why is using sales dollars as an allocation base usually a poor choice for allocating fixed costs to operating departments?

Q:

Why is using sales dollars as an allocation based usually a poor choice for allocating fixed costs to operating departments?

Q:

Piedmont Fasteners Corporation makes three different clothing fasteners in its manufacturing facility in North Carolina. All three products are sold in highly competitive markets, so the company is...

Q:

Human has made an impact on many biogeochemical cycles. However, the consequences of human impact on different cycles are different. Which of the following cycle is likely to have the greatest effect...

Q:

read only two of the following articles. What was the main point of the two articles you read? pls dont copy and paste Article 1 ) How Should Christians Engage with Pop Culture? February 19, 2021 by...

Q:

Consider a bond that, when issued, has a coupon rate of 7 % and a maturity of 1 5 years. Based on our usual assumptions about bonds, Choose the best answer. Group of answer choices The bond promises...

Q:

What are the whatif scenarios used to further investigate project uncertainty exposure?

Q:

What are the main uses of quality cost reports?

Q:

Why are managers often unaware of the magnitude of quality costs?

Q:

The PC Works assembles custom computers from components supplied by various manufacturers. The company is very small and its assembly shop and retail sales store are housed in a single facility in a...

Q:

CAPM, portfolio risk, and return Consider the following information for three stocks, Stocks X, Y, and Z. The returns on the three stocks are positively correlated, but they are not perfectly...

Q:

A stock has an expected return of 10.1 percent, its beta is 1.04, and the risk-free rate is 6.45 percent. What must the expected return on the market be? (Do not round intermediate calculations and...

Q:

What is the portfolio beta based on the information below: Stock Weight Beta A 15% 0.85 B 25% 0.91 C 40% 1.31 D 20% 1.76 Using the information above, what is the expected return on the portfolio if...