The direct method of allocating service department costs to producing departments ignores ________.
A) services provided by service departments to central corporate offices
B) services provided by service departments to user departments
C) services provided by service departments to other service departments
D) services provided by service departments to producing departments

Question

Quizplus · Accepted Answer

The direct method of allocating service department costs to producing departments ignores services provided by service departments to other service departments. This can lead to inaccurate cost allocations and may not reflect the true cost of the services provided by each department. To address this issue, a more complex method of allocating service department costs, such as the reciprocal method, may be used.

The Direct Method of Allocating Service Department Costs to Producing