ABC Corporation Has Three Service Departments with the Following Costs

question 136

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

---

Definitions:

Fixed Costs

Costs that remain constant and do not vary based on the number of units produced or sold.

Competitive Price Environment

A market situation where multiple sellers attempt to attract customers by keeping their prices competitively low.

Pricing Objectives

are the goals that guide how a business sets the prices of its products or services, with considerations for maximizing profits, capturing market share, or achieving other strategic aims.

Reference Price

A reference price is the price that consumers consider reasonable or fair for a product or service, which they use as a benchmark to evaluate the actual price.