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.

---

Definitions:

Trading Security

A security bought and held primarily for sale in the near term to generate income on short-term price differences.

Available-For-Sale Security

A type of investment in debt or equity securities that is not classified as held-to-maturity or trading securities and can be sold in the short term.

Operating Activity

Transactions and events related to the core business functions of an organization, such as sales and purchases of goods or services.

Financing Activities

Transactions and events that affect the long-term liabilities and equity of a company, such as issuing debt, repaying loans, or distributing dividends.