Question

Which of the following statements is false regarding service department charges to operating departments?

A. Service department costs may be allocated based on actual usage by operating departments.
B. Service department costs are not directly incurred by operating departments.
C. Service department charges aim to accurately reflect the services used by operating departments.
D. Service department charges do not affect the overall budget of operating departments

Answer 1

Statement D is false because service department charges do affect the overall budget of operating departments.

Step-by-step explanation:

Regarding service department charges to operating departments, statement D is false. Service department charges do affect the overall budget of operating departments. The charges from service departments are allocated to operating departments and become a part of their overall budget.

For example, let's say the IT department provides services to the Marketing department. The IT department will charge the Marketing department for the services provided, and this charge will be included in the Marketing department's budget.

Therefore, the correct statement is that service department charges do affect the overall budget of operating departments.