Which of the following statements about service department costs is not true?
A) Service department costs include the costs of providing services to other departments within an organization.
B) Service department costs are not allocated to other service departments.
C) Service department costs should be allocated using an allocation base or cost driver related to the costs incurred.
D) Service department costs do not include the costs of providing services to external customers.

Question

Quizplus · Accepted Answer

This statement is not true because service department costs may be allocated to other service departments depending on the specific allocation method used by the organization. It is common for organizations to allocate service department costs to other service departments if they are using a step-down or reciprocal allocation method.

Which of the Following Statements About Service Department Costs Is