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.

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