The manager of an operating department just received a cost report and has made the following comment

Question:

The manager of an operating department just received a cost report and has made the following comment with respect to the costs allocated from one of the service departments: "This charge to my division does not seem right. The service center installed equipment with more capacity than our division requires. Most of the service department costs are fixed, but we seem to be allocated more costs when other departments use less. We are paying for excess capacity of other departments when other departments cut their usage levels." How might this manager's problem be solved?

Fantastic news! We've Found the answer you've been seeking!

Step by Step Answer:

Related Book For  book-img-for-question

Cost Accounting

ISBN: 9780256069198

3rd Edition

Authors: Edward B. Deakin, Michael Maher

Question Posted: