What is the first step in allocating service department costs to production departments?
A)Assign overhead costs that are directly attributable to a service or production department.
B)Allocate other overhead costs based on appropriate cost drivers.
C)Allocate service department costs to production departments.
D)None of the answers is correct.

Question

Quizplus · Accepted Answer

The first step in allocating service department costs to production departments is to assign overhead costs that are directly attributable to a service or production department. This includes costs such as salaries and supplies that are only used by a specific department. Once these costs have been assigned, the remaining indirect costs can be allocated based on appropriate cost drivers.

What Is the First Step in Allocating Service Department Costs