The correct answer is D. Both b and c.
The sales mix allocation method is a method of allocating support department costs to production departments based on the relative sales mix of the products produced by those departments. The dual-rate cost-allocation method is a method of allocating support department costs to production departments based on both the number of units produced by each department and the amount of resources used by each department. The single rate cost allocation method is a method of allocating support department costs to production departments based on the number of units produced by each department.
The sales mix allocation method is not a valid approach to allocate costs of support department because it does not take into account the amount of resources used by each production department. The dual-rate cost-allocation method is a valid approach to allocate costs of support department because it takes into account both the number of units produced by each production department and the amount of resources used by each department. The single rate cost allocation method is a valid approach to allocate costs of support department because it takes into account the number of units produced by each production department.
Here are some additional details about each of the three approaches:
- The sales mix allocation method is based on the assumption that the costs of support departments are directly proportional to the sales mix of the products produced by the production departments. This assumption is not always valid, as the costs of support departments may be affected by other factors, such as the volume of production or the type of equipment used.
- The dual-rate cost-allocation method is based on the assumption that the costs of support departments can be divided into two categories: variable costs and fixed costs. Variable costs are those that vary directly with the volume of production, while fixed costs are those that remain constant regardless of the volume of production. The dual-rate cost-allocation method allocates variable costs to production departments based on the number of units produced, and allocates fixed costs to production departments based on the amount of resources used.
- The single rate cost-allocation method is based on the assumption that all of the costs of support departments are variable costs. This assumption is not always valid, as some of the costs of support departments may be fixed costs. However, the single rate cost-allocation method is a simple and easy-to-use method, and it is often used in practice.