A rational and systematic allocation base for service department costs should reflect the cost accountant's consideration of all of the following except
A)the ability of revenue-producing departments to bear the allocated costs.
B)the benefits received by the revenue-producing department from the service department.
C)a causal relationship between factors in the revenue-producing department and costs incurred in the service department.
D)all of the above are considerations.

Question

Quizplus · Accepted Answer

All of the given options are important considerations when allocating service department costs. Ignoring any of these factors may result in an inequitable allocation of costs and distort the cost of goods or services produced by the revenue-producing departments. Therefore, all of these considerations should be taken into account when developing a rational and systematic allocation base for service department costs.

A Rational and Systematic Allocation Base for Service Department Costs