Cost Accounting (15th Edition)

Published by Prentice Hall
ISBN 10: 0133428702
ISBN 13: 978-0-13342-870-4

Chapter 15 - Allocation of Support-Department Costs, Common Costs, and Revenues - Assignment Material - Questions - Page 622: 15-3

Answer

Budgeted cost rates encourage support department managers to enhance efficiency as they are held responsible for any unfavorable cost variances. This motivates them to control costs and operate more efficiently to meet budgeted rates, ultimately benefiting the organization.

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