Using the Step Method of Allocating Service Department Costs,the Costs

question 32

Multiple Choice

Using the step method of allocating service department costs,the costs are allocated to:

• A) service departments only.
• B) operating departments only.
• C) both service departments and operating departments.
• D) neither service departments nor operating departments.

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Definitions:

Advertising Expense

Advertising expense is the cost incurred in promoting products or services through various media to increase sales.

Interest Expense

The cost incurred by an entity for borrowed funds, including loans, bonds, or lines of credit, which is charged as an expense on the income statement.

Utility Bill

A regular invoice for essential services such as electricity, water, gas, or telecommunications provided to individuals or businesses.

Journal Entries

The record of financial transactions as they occur, detailing the accounts that are affected and in what way.