A company has three departments; production, finishing and service department with inter-departmental services. Which of the following is not true? OA. The service department cost will be reallocated to other departments OB. The service department overhead cost will not form part of the overhead cost to be charged to the product since it does not relate to production OC. None of the above OD. Service department overhead can be reallocated using percentage of service rendered to other departments

A company has three departments; production, finishing and service department with inter-departmental services. Which of the following is not true? OA. The service department cost will be reallocated to other departments OB. The service department overhead cost will not form part of the overhead cost to be charged to the product since it does not relate to production OC. None of the above OD. Service department overhead can be reallocated using percentage of service rendered to other departments

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Concept explainers

Overheads

In cost accounting, overhead refers to those expenses which occur during the operating of a business. Overhead includes the fixed, variable, or semi-variable which is not directly involved with a company product or service. It is very important to analyze overhead expense as it helps the company in determining how much a company must charge for its products and services so that they can generate profit. Overhead expenses depend upon the nature of the business operations.

Question

A company has three departments; production, finishing and service department with inter-departmental services. Which
of the following is not true?
OA. The service department cost will be reallocated to other departments
OB. The service department overhead cost will not form part of the overhead cost to be charged to the product since it does not relate to production
OC. None of the above
OD. Service department overhead can be reallocated using percentage of service rendered to other departments

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