What Is the Final Step for Allocating Service Department Costs

question 61

Multiple Choice

What is the final step for allocating service department costs to production departments?

• A)Assign overhead costs that are directly attributable to a service or production department.
• B)Allocate other overhead costs (that are not directly attributable to a service or production department)based on some cost driver.
• C)Allocate service department costs to production departments
• D)Service department costs cannot be allocated to production departments.

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Definitions:

Critical Thinking

The objective analysis and evaluation of an issue in order to form a judgment.

Deductive Reasoning

A logical process where one reaches a specific conclusion based on general principles or premises that are assumed to be true.

Inductive Reasoning

A method of reasoning in which specific observations or examples are used to form general conclusions or principles.

Environmental Factors

Elements outside the organization that can impact its performance, such as economic, social, technological, and political conditions.