Why Do Managers Assign the Direct Costs of Service Departments

question 31

Multiple Choice

Why do managers assign the direct costs of service departments to customers instead of the producing department?

• A) for ease of calculation
• B) to reduce bookkeeping costs
• C) to prevent cost distortions due to the use of a cost allocation base by the producing department that has little relationship to the cause of customer service costs
• D) because customers are the only cost objects with direct costs

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