A profit center calculates the service department charges to be paid by it:
A) as the difference between its controllable expenses and controllable revenues.
B) as the difference between its direct operating expenses and controllable expenses.
C) as a product of service usage and total service department expense.
D) as a product of service usage and service department charge rate.

Question

Quizplus · Accepted Answer

A profit center calculates the service department charges by multiplying the service usage with the service department charge rate. This method ensures that the charges are directly linked to the amount of service used by the profit center, and accounts for the total expenses incurred by the service department in providing those services.

A Profit Center Calculates the Service Department Charges to Be