In the two-stage cost allocation process, costs are assigned:
A) from jobs, to service departments, to production departments.
B) from service departments, to jobs, to production departments.
C) from service departments, to production departments, to jobs.
D) from production departments, to jobs, to service departments.
E) from the balance sheet (when goods are produced), to the income statement (when goods are sold).

Question

Quizplus · Accepted Answer

In the two-stage cost allocation process, costs are first allocated from service departments to production departments. In the second stage, the costs accumulated in the production departments are then allocated to the individual jobs or products. This method recognizes the support provided by service departments to production departments and then assigns the comprehensive production costs to specific jobs for accurate product costing.

In the Two-Stage Cost Allocation Process, Costs Are Assigned