Consider a company with two producing departments and one service department. The service department allocates its costs

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Consider a company with two producing departments and one service department. The service department allocates its costs to the producing departments on the basis of the number of employees in each department. If the costs in the service department are fixed by policy forthe coming period, what effect would the (unexpected) addition of employees in one production department have on the service costs allocated to the other? Comment on the reasonableness of the situation.

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Cost Management Strategies For Business Decisions

ISBN: 12

4th Edition

Authors: Ronald Hilton, Michael Maher, Frank Selto

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