Charges for Service Department Costs to Operating Departments Should Be

question 38

True/False

Charges for service department costs to operating departments should be based on the actual variable costs and the budgeted fixed costs of the service department.

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Definitions:

Management By Exception

A management strategy where leadership steps in only when performance deviates significantly from standards, focusing on the exceptions rather than routine operations.

Price Variance

The difference between the actual price paid for something and its standard or expected price, often analyzed in cost accounting.

Quantity Variance

The difference between the expected and actual quantity of materials used in production, reflecting efficiency in material usage.

Direct Materials

The raw materials directly used in the manufacturing of a product.