When allocating service department costs to producing departments,which of the following guidelines is NOT followed?
A) Allocate variable- and fixed-cost pools separately.
B) Establish the cost-allocation procedure before rendering the service.
C) Evaluate performance using flexible budgets for each service department.
D) Establish the cost-allocation procedure after rendering the service.

Question

Quizplus · Accepted Answer

The cost-allocation procedure should be established before rendering the service to ensure that it is a fair and reasonable allocation method. Waiting until after the service has been provided could lead to biased allocations. The other options listed (A, B, and C) are all important guidelines that should be followed when allocating service department costs to producing departments.

When Allocating Service Department Costs to Producing Departments,which of the Following