Service department costs should not be separated into fixed and variable costs when charging operating departments for their services.

Question

Quizplus · Accepted Answer

Service department costs can be separated into fixed and variable costs, and this information can be helpful in determining the most accurate method for charging operating departments for services. For example, fixed costs such as rent and salaries can be allocated based on square footage or number of employees, while variable costs such as supplies and maintenance can be allocated based on actual usage.

Service Department Costs Should Not Be Separated into Fixed and Variable