alleryStart learning →Which apportionment basis may not be fair, since some departments take most of the burden?
ASurvey time basis
BService or use basis
CDirect labour basis
DAbility to pay basis
Answer & Solution
Correct answer: D. Ability to pay basis
Loading overhead by sales or profit can push a heavy share onto the most profitable departments regardless of benefit received.
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Related questions
In the CIMA description of ABC, activities are assigned to what?In which journal did Cooper and Kaplan publish ABC articles from 1988?Drucker said ABC also records the cost of what?What limits the use of ABC, especially in services?What is a danger of ABC, like other cost allocation approaches?The chief executive's salary stays unassigned in ABC. What are such costs termed?Why did indirect costs rise relative to direct costs in modern factories?How does ABC assign costs, rather than using broad arbitrary percentages?