Which Service Department Cost Allocation Method Assigns Indirect Costs to Cost

question 145

Multiple Choice

Which service department cost allocation method assigns indirect costs to cost objects after considering interrelationships of the cost objects?
$\text {\underline{Algebraic method. } }$                                 $\text {\underline{ Step method} }$

• A)no no
• B)no yes
• C)yes yes
• D)yes no

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Definitions:

Variable Cost

Costs that change in proportion to the level of production or business activity, such as materials and labor.

Variable Cost

Costs that vary in direct proportion to changes in levels of production or business activity, such as materials and labor.

Fixed Cost

A cost that does not change with the volume of sales.

Fixed Costs

Expenses that do not change in proportion to the activity of a business, such as rent, salaries, and loan payments.