Departmentalisation of overheads aids:
ACost control by responsibility
BIncrease in fixed cost
CReduction of variable cost
DDirect cost charging
Answer & Solution
Correct answer: A. Cost control by responsibility
1. By collecting overheads per department, managers become responsible for the cost their unit drives.
2. This sharpens cost control because each centre's variance can be traced to its head.
3. Departmentalisation does not by itself lower costs.
4. Hence the chief purpose is cost control by responsibility.
_Source: ICAI BoS Inter Paper 3, Ch 4 "Overheads", §4.4 ¶1_
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