Question: Briefly describe the two popular methods for allocating service department
Briefly describe the two popular methods for allocating service department costs.
Answer to relevant QuestionsWhat does the direct method of allocating service department costs ignore? Why do companies use the direct method despite this weakness?Review the section Allocation of Service Department Costs, pages 483 – 490, especially the example of the use of the computer by the university. Recall that the budget formula was $100,000 fixed cost monthly plus $200 per ...The motor pool of a major city provides automobiles for the use of various city departments. Currently, the motor pool has 50 autos. A recent study showed that it costs $4,800 of annual fixed cost per automobile plus $.30 ...Memphis Wholesale Distributors uses an ABC system to determine the cost of handling its products. One important activity is receiving shipments in the warehouse. Three resources support that activity:(1) recording and record ...Blakely Company makes three product lines and has two customer types. The following table gives sales, product cost, and cost-to-serve data for Blakely:The cost to serve all customers is $10,000 and is allocated to customer ...
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