ABC Corporation Has Three Service Departments with the Following Costs

question 129

Multiple Choice

ABC Corporation has three service departments with the following costs and activity base: ABC has three operating divisions, Micro, Macro and Super. Their revenue, cost and activity information are as follows:
What is the service department charge rate for the Accounting Department?

• A) $714
• B) $250
• C) $625
• D) $.004

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Definitions:

Estimated Inventory

An approximate calculation of a company's inventory, used when an exact count is not feasible and typically utilized in a periodic inventory system.

Gross Profit Method

An inventory estimation technique that calculates cost of goods sold and ending inventory based on gross profit margin.

Estimated Ending Inventory

A projection of the value of inventory on hand at the end of an accounting period, often calculated using inventory methods such as FIFO or LIFO.

Gross Profit Rate

The ratio of gross profit (sales minus cost of goods sold) to sales revenue, expressed as a percentage.