Why Are the Costs of Operating Service Departments Allocated to Other

question 65

Multiple Choice

Why are the costs of operating service departments allocated to other departments?

• A)Many departments consume the services provided by service departments and should be assigned a share of the costs associated with the services consumed.
• B)Allocating service costs to other departments for services provided gives department managers incentives to control the use of support services.
• C)External reporting regulations (for tax and financial reporting)require allocating manufacturing overhead to the units produced.
• D)All of the answers are correct.

---

Definitions:

Compact Bone

The dense, hard outer layer of bone tissue that makes up the majority of the structure of a bone, providing strength and support.

Periosteum

A dense layer of vascular connective tissue enveloping the bones except at the surfaces of the joints.

Diaphysis

The shaft or central part of a long bone, which is composed mainly of compact bone and contains the medullary cavity.

Epiphyses

The ends of long bones, where growth in length occurs during childhood and adolescence.