Indirect expenses should be allocated to departments based upon the benefits received by each department.

Question

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Indirect expenses are costs that cannot be directly traced to a specific department, such as rent, utilities, or office supplies. These expenses should be allocated to departments based on the benefits received by each department. For example, if the marketing department uses more electricity due to their frequent use of computers and other technology, they should be allocated a larger portion of the utilities expense. This helps to ensure that each department is being charged fairly for the expenses they are causing.

Indirect Expenses Should Be Allocated to Departments Based Upon the Benefits