Question

For each of the following types of indirect expenses and service department expenses, identify one allocation basis that could be used to distribute it to the departments indicated.
a. Computer service expenses of production scheduling for operating departments.
b. General office department expenses of the operating departments.
c. Maintenance department expenses of the operating departments.
d. Electric utility expenses of all departments.

Answer 1

Answer: (A) Computer service expenses of production scheduling for operating departments

Explanation:

 The computer services expenses of the production scheduling is one of the type of indirect expenses and also the type of service department expenses type in the operating department.

 The indirect expenses is one of the type of expenses that cannot be directly contribute with the cost object or services in the business department expenses.

 According to the given question, the computer service expenses is one of the allocation basis that is used as the indirect expenses in an organization or firm and the indirect expenses are categorized into two main parts that is:

 1) Fixed

 2) Recurring

Therefore Option (A) is correct answer.