Which accounting approach assigns facility costs to user departments based on consumption?

• A. Centralized Budgeting
• B. Grant-In-Aid Model
• C. Chargeback System
• D. Zero-Based Budgeting

Answer: (C)

Allocating facility costs to user departments based on consumption is a chargeback system. In FM, shared costs like utilities, maintenance, and space are assigned to departments using drivers that reflect actual use. This creates a direct link between how much a department consumes and the charges it bears, promoting accountability and encouraging efficient behavior. For example, a department that uses more square footage, equipment, or energy will incur higher charges, while lighter users pay less. This approach differs from centralized budgeting, where costs are managed at the overall level and not allocated strictly by usage; zero-based budgeting starts each period from zero and builds the budget from scratch, rather than allocating existing costs by consumption; and the grant-in-aid model relies on external funding rather than internal cost allocation based on usage.