Consider the following statements about support department costs.
i. In order to assign all manufacturing costs to products, support department costs must be allocated to production departments.
ii. Support department costs are period costs rather than product costs because the support departments are not directly involved in production.
iii. Support departments are not considered crucial to the production process.
Which statement/s is/are correct?
A) i, ii and iii
B) i and iii
C) iii
D) i

Question

Quizplus · Accepted Answer

i. Support department costs must be allocated to production departments to ensure all manufacturing costs are assigned to products, making them part of the product cost. ii. This statement is incorrect because, although support departments are not directly involved in production, their costs are allocated to production departments, making them part of product costs, not period costs. iii. Support departments, while not directly involved in production, are crucial for the production process as they provide necessary services (like maintenance, security, and administration) that enable production departments to operate efficiently.

Consider the Following Statements About Support Department Costs