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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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