Service department costs are allocated to producing departments
A)so that the costs can be allocated to the products in the producing departments.
B)so that less cost is allocated to service departments.
C)so that the service will not be purchased externally.
D)All of these answer choices are correct.

Question

Quizplus · Accepted Answer

Service department costs are allocated to producing departments so that the costs can be allocated to the products in the producing departments. This is necessary to accurately determine the cost of production for each product and to make pricing and production decisions. Allocating less cost to service departments or ensuring that the service is not purchased externally are not the primary reasons for allocating service department costs to producing departments.

Service Department Costs Are Allocated to Producing Departments