Fixed Service Department Costs Should Be Charged to Operating Departments

question 9

Multiple Choice

Fixed service department costs should be charged to operating departments at the end of the period according to which one of the following the formulas?

• A)Budgeted rate x Budgeted activity.
• B)Budgeted rate x Actual activity.
• C)Actual rate x Actual activity.
• D)Budgeted total cost x Percentage of peak-period capacity required.

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Definitions:

Credited

The acknowledgment of a payment received or the addition of funds to an account.

Account

An account statement that captures all transactions associated with a specific aspect of the accounting equation.

Payment

The transfer of money from one party to another as compensation for goods or services or as repayment of a loan.

Invoice

A document issued by a seller to a buyer, detailing products or services provided, prices, and terms of payment.