Service cost centre costs are assigned to:

Question

Quizplus · Accepted Answer

Service cost centre costs are indirect costs, and as such, they need to be allocated to production cost centres. This allocation is done because the activities performed by service cost centres support the activities of production cost centres, and therefore, the costs of the service centres need to be allocated to the products or services produced by the production cost centres. Assigning the costs of service cost centres to individual customers or units of output would not be appropriate, as these costs are indirect and relate to supporting activities rather than specific products or customers. Corporate headquarters may benefit indirectly from the services provided by service cost centres, but this benefit is not direct and therefore, allocating the costs to corporate headquarters would not be appropriate either.

Service Cost Centre Costs Are Assigned To