(Appendix 12B)The fixed costs of service departments should be allocated to operating departments in predetermined lump-sum amounts that are determined in advance.

Question

Quizplus · Accepted Answer

Allocating fixed costs in predetermined lump-sum amounts helps to provide more accurate cost information to operating departments and simplifies the allocation process. This is a common method used in activity-based costing systems.

(Appendix 12B)The Fixed Costs of Service Departments Should Be Allocated