How to Allocate Support Costs using the Dual Rate Method

This video shows how to allocate the costs of a support department using the dual-rate method. There are three ways to allocate costs:
(1) using budgeted costs and budgeted hours
(2) using actual costs and actual hours
(3) using budgeted costs and actual hours
The dual-rate method refers to a situation in which one rate is used to allocate the fixed costs of a support department while a different rate is used to allocate the variable costs of a support department. This is in contrast to the single-rate method in which a single rate that includes both fixed and variable costs is used to allocate the costs of a support division to operating divisions.

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