Asked by Kaitlyn Conigliaro on May 20, 2024
Verified
For performance evaluation purposes, the fixed costs of a service department should be charged to operating departments using:
A) actual fixed costs and the budgeted level of activity for the period.
B) budgeted fixed costs and the actual level of activity for the period.
C) budgeted fixed costs and the peak-period or long-run average servicing capacity.
D) actual fixed costs and the peak-period or long-run average servicing capacity.
Fixed Costs
Fixed costs are expenses that do not fluctuate with changes in production volume or business activity levels.
Service Department
An organizational unit that provides support to the main production operations, often through maintenance, logistics, or administrative services.
- Recognize the importance and methods of allocating fixed and variable costs to operating departments for performance evaluation.
- Differentiate between various cost allocation bases and understand their application in cost accounting.
Verified Answer
Learning Objectives
- Recognize the importance and methods of allocating fixed and variable costs to operating departments for performance evaluation.
- Differentiate between various cost allocation bases and understand their application in cost accounting.
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