Unlike Enterprise Funds, It Is Frequently Desirable for Internal Service

question 8

True/False

Unlike enterprise funds, it is frequently desirable for internal service funds to operate at a profit.

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Definitions:

Activity-Based Costing

An accounting method that identifies the activities a firm performs and then assigns indirect costs to products. It improves accuracy of product costing by linking cost more directly to the activities that drive those costs.

Overhead Cost

Indirect expenses related to the general operation of a business, not directly tied to a specific product or service.

First Stage Allocations

The initial process of distributing overhead costs to various cost centers or departments in a company.

Order Filling

The process of completing a customer's order, including picking, packing, and shipping the product.