Variable cost

Q – Excellent explanation; is one preferred over the other and why/why not?A – I don’t believe one is preferred more than the other because they both have their flaws the single rate method allocates fixed cost and make them appear as a variable cost. This is bad because a company may take actions that could harm this as a whole. A good thing is that it allocates cost based of actual usage. A dual rate is based on budgeted usage. This is way i don’t see one as preferred more then another. Instructor’s Q – I like your logic; is there an advantage of one over the other in specific circumstances?Criteria – If answer is outside of our textbook, please provide your source or reference, if within, provide the page or pages.Reference – Horngren, C. T., Datar, S.M., Foster, G., Rajan, M., & Ittner, C. (2009). Cost Accounting: A Managerial Emphasis (13th ed.). Upper Saddle River, NJ: Pearson Prentice Hall.Dual rate method is better for decision making as compared to single rate method especially inthe case of outsourcing, which if decision taking according to single rate method, will benefit the…

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