Consider the following statements about support department cost allocations.
i. In a modern manufacturing environment, it is not necessary to allocate support department costs.
ii. Support department cost allocations continue to be necessary when a highly automated system is in use.
iii. In a flexible manufacturing system, the need to allocate costs diminishes because more costs have become traceable to the product.
Which statement/s is/are true?

A) i
B) i and ii
C) ii and iii
D) i, ii and iii

Question

Oscar & Clarisol Mejia · Accepted Answer

Final Answer : C, Explanation :  Statement i is false because support department cost allocation is still necessary even in a modern manufacturing environment. Statement ii is true because highly automated systems require greater support department costs, such as IT and maintenance. Statement iii is also true because flexible manufacturing systems allow for more direct tracing of costs to the product, reducing the need for allocations.

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