Question

In the preparation of departmental income statements, the preparer completes the following steps in the following order: (1 point)
a. Identify direct expenses; allocate indirect expenses; allocate service department expenses.
b. Identify indirect expenses; allocate direct expenses; allocate service department expenses.
c. Identify service department expenses; allocate direct expenses; allocate indirect expenses.
d. Identify direct expenses, allocate service department expenses, allocate indirect expenses.
e. Allocate all expenses.

Answer 1

Answer:

The correct answer is a. Identify direct expenses; allocate indirect expenses; allocate service department expenses.

Explanation:

Selling costs are the costs incurred by a company to market the products or services, such as the salary of the sellers, commissions, gasoline of the trucks that distribute the orders, advertising, etc. Administrative expenses are the costs incurred by a company to manage its operations. Examples of these expenses would be the salary of the accountant, the surveillance expenses, the expenses for the cleaning service, stationery, salaries and benefits of the administrative staff of the company, etc. Some concepts can be shared, such as office rent. If there are sales and administration departments in the same building; The total expenditure must be applied to the two departments according to the space each of them uses (square meters) or at an estimated percentage; for the  therefore, of the total rent one part would be selling expenses and another part administration expenses.