For performance evaluation purposes, variable service department costs should be charged to operating departments in predetermined, lump-sum amounts.

Question

Quizplus · Accepted Answer

Variable service department costs should be allocated to operating departments based on usage or other appropriate allocation bases, rather than predetermined lump-sum amounts. This provides a more accurate and fair distribution of costs based on the actual amount of resources used by each operating department.

For Performance Evaluation Purposes, Variable Service Department Costs Should Be