The costs of services charged to a profit center based on the usage of the service are called:
A) operating expenses.
B) noncontrollable charges.
C) service department charges.
D) activity charges.

Question

Quizplus · Accepted Answer

These costs are known as service department charges, which are allocated to profit centers according to their usage of the service provided by the service department. This allocation helps to determine the true cost of goods produced and services provided by the profit center. Operating expenses and noncontrollable charges are not directly related to usage of services and activity charges refer to a specific type of cost allocation rather than a broad category.

The Costs of Services Charged to a Profit Center Based