If Two Service Departments Service the Same Number of Departments

question 126

Multiple Choice

If two service departments service the same number of departments, which service department's costs should be allocated first when using the step method?

• A) The service department that provides the most service to other service departments.
• B) The service department that provides the most service to the user departments.
• C) The service department with the least cost.
• D) The service department that provides the least service to other service departments.

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Definitions:

Comparative Advantage

The capacity of an entity, whether a single person, a corporation, or a nation, to create a product or offer a service more cost-effectively in terms of foregone opportunities than its competitors.

Low Opportunity Cost

A situation where the cost of foregoing the next best alternative is relatively minimal when choosing one option over another.

Computer Software

Programs and operating information used by a computer to perform specific tasks.

Law Of Comparative Advantage

is an economic principle that states countries (or entities) gain when they produce goods and services for which they have a lower opportunity cost, leading to more efficient global production.