1.What is the implicit time horizon that we assume when we allocate support activity costs to other cost objects such as products and other activities?
2.We rank support departments when using the step-down method. Alternate ranking criteria include department size, number of other departments serviced, and arbitrary ranking. Which method will usually produce the smallest errors, relative to the answers obtained from the conceptually accurate reciprocal method?
3.Why do we prefer to use predetermined rates to charge out support department costs to other departments?
4.What is the key difference between an allocation from a support department and a transfer price? Does this distinction matter for pricing the service? For evaluating responsibility center managers?