ABC Corporation Has Three Service Departments with the Following Costs

question 80

Multiple Choice

ABC Corporation has three service departments with the following costs and activity base: What is the service department charge rate for the Personnel Department?

• A) $2,758
• B) $3,200
• C) $3,077
• D) $1,000

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Definitions:

Fixed Costs

Expenses that do not change in proportion to the activity of a business.

Net Income

Net income is the total earnings of a company after all expenses and taxes have been deducted from revenues, indicating the company's profitability over a specific period.

Sales

The total amount of money received by a company for goods or services sold during a certain time period.

Margin of Safety Ratio

This ratio measures the difference between actual or expected sales and sales at the break-even point, indicating the buffer against a loss.