Question
1) The method of allocating service department costs that allocates the costs to both service departments and operating departments is the: Indirect method Weighted average
1) The method of allocating service department costs that allocates the costs to both service departments and operating departments is the:
Indirect method
Weighted average method
Step method
Direct method
2) Cost allocation involves:
calculating an allocation rate for each cost to be allocated.
multiplying the allocation rate by the weight of the cost driver.
All of these answers are correct.
identifying a cost driver for each cost to be allocated.
3) Some costs that possibly could be traced directly to cost objects are nonetheless classified as indirect costs because:
All of these answers are correct. Such costs cannot be traced to objects in a cost-effective manner. Generally accepted accounting principles require some costs to be treated as indirect. Such practice results in a more accurate accumulated cost for the object.
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