question archive To ensure unbiased cost allocations, fixed costs should be allocated on the basis of estimated long-run use by user-department managers
To ensure unbiased cost allocations, fixed costs should be allocated on the basis of estimated long-run use by user-department managers
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To ensure unbiased cost allocations, fixed costs should be allocated on the basis of estimated long-run use by user-department managers.” Do you agree? Why?
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Answer:
Disagree. Allocating costs on ?the basis of estimated long-run use by user department managers? means department managers can lower their cost allocations by deliberately underestimating their long-run use (assuming all other managers do not similarly underestimate their usage)
