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Some advantages of the dual-rate method are: (Select all that apply.) A. Operating department managers will only use an external provider of material handling services
Some advantages of the dual-rate method are: (Select all that apply.) A. Operating department managers will only use an external provider of material handling services if it costs more than the variable rate cost per hour ($40 in our scenario here) charged by the Materials Management Department. The single-rate method therefore avoids the potential conflict of interest that can arise under the dual-rate method. B. By charging the fixed costs of resources budgeted to be used by the operating departments as a lump sum, the dual-rate method succeeds in removing fixed costs from the operating department managers' consideration when making marginal decisions to outsource services. C. The dual-rate method guides department managers to make decisions that benefit both the organization as a whole and each department because it signals to department managers that variable costs and fixed costs behave differently. D. Operating department managers will only use an external provider of material handling services if it costs less than the variable rate cost per hour ($20 in our scenario here) charged by the Materials Management Department. The dual-rate method therefore avoids the potential conflict of interest that can arise under the single-rate method. E. Allocating fixed costs based on budgeted usage helps user departments with both short-run and long-run planning because user departments know the costs allocated to them in advance. Companies commit to infrastructure costs (such as the fixed costs of a support department) on the basis of a long-run planning horizon; budgeted usage measures the long-run demands of the user departments for support-department services. F. By charging the fixed costs of resources budgeted to be used by the operating departments as a lump sum, the dual-rate method succeeds in removing variable costs from the operating department managers' consideration when making marginal decisions to outsource services
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