Why are the costs of operating service departments allocated to other departments?
A)Many departments consume the services provided by service departments and should be assigned a share of the costs associated with the services consumed.
B)Allocating service costs to other departments for services provided gives department managers incentives to control the use of support services.
C)External reporting regulations (for tax and financial reporting)require allocating manufacturing overhead to the units produced.
D)All of the answers are correct.

Question

Quizplus · Accepted Answer

All of the choices listed are reasons why costs of operating service departments are allocated to other departments. Many departments consume services provided by service departments, allocating service costs provides incentives for department managers to control use of support services, and external reporting regulations require the allocation of manufacturing overhead to the units produced. Therefore, all of the answers are correct.

Why Are the Costs of Operating Service Departments Allocated to Other