Questions:
1. Why is it important to identify and use causal factors to allocate support service costs?
2. Explain why it is better to allocate budgeted support service costs rather than actual support service costs.
3. Why is it desirable to allocate variable costs and fixed costs separately?
4. Explain why either normal or peak capacity of the producing (or user) departments should be used to allocate the fixed costs of support departments.
5. Explain why variable bases should not be used to allocate fixed costs.