Question

The benefit of the dual-rate charging method of cost allocation is:

a.it is easy to apply since it assumes variable costs to be fixed.
b.it is similar to a plantwide overhead rate where all support department costs are accumulated in the numerator and some measure of usage is in the denominator.
c.it sends the correct signal regarding the increased usage of a support department during the peak usage period of the department.d.itt makes supporting departments responsible for their usage and helps to prevent overuse of resources.

Answer 1

The dual-rate charging method of cost allocation is beneficial because it sends accurate signals about the cost of support department usage during peak periods, promoting efficiency and preventing resource overuse.

Step-by-step explanation:

The benefit of the dual-rate charging method of cost allocation is c.it sends the correct signal regarding the increased usage of a support department during the peak usage period of the department. This cost allocation method differentiates between fixed costs and variable costs, promoting accurate signaling to users about the real cost of utilizing support during periods of high demand. It ensures that variable costs are charged during peak usage, discouraging overuse and promoting resource efficiency.

The benefit of the dual-rate charging method of cost allocation is option c: it sends the correct signal regarding the increased usage of a support department during the peak usage period of the department. This method helps allocate costs in a more accurate and fair manner by considering the different usage levels of support departments during peak periods. By doing so, it ensures that support departments are responsible for their usage and can prevent the overuse of resources.