Consider the Following Statements About Support Department Costs

question 29

Multiple Choice

Consider the following statements about support department costs.
i. In order to assign all manufacturing costs to products, support department costs must be allocated to production departments.
ii. Support department costs are period costs rather than product costs because the support departments are not directly involved in production.
iii. Support departments are not considered crucial to the production process.
Which statement/s is/are correct?

• A) i, ii and iii
• B) i and iii
• C) iii
• D) i

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Definitions:

Process Costing

An accounting methodology used for homogeneous products, which assigns average costs to units of output on the basis of the process they undergo.

Weighted-Average Method

An inventory valuation method averaging the cost of goods available for sale and assigning an average cost to each unit.

Assembly Department

A segment within a manufacturing facility where parts are assembled into final products.

Units Transferred

The quantity of goods moved from one production process or department to another in the manufacturing process.