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Accounting

27th Edition
WARREN + 5 others
ISBN: 9781337272094

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BuyFindarrow_forward

Accounting

27th Edition
WARREN + 5 others
ISBN: 9781337272094
Textbook Problem

Activity bases for service department charges

 For each of the following service departments, select the activity base listed that is most appropriate for charging service expenses to responsible units:

Service Department Activity Base
a. Accounts Receivable 1. Number of employees trained
b. Central Purchasing 2. Number of payroll checks
c. Computer Support 3. Number of sales invoices
d. Conferences 4. Number of computers
e. Employee Travel 5. Number of conference attendees
f. Payroll Accounting 6. Number of travel claims
g. Telecommunications 7. Number of purchase requisitions
h. Training 8. Number of cell phone minutes used

To determine

Service department charges: These are the indirect expenses incurred by profit center. These are charged for the services received by the department or division, based on the activity base of the service department.

To identify: The activity base of the given service department

Explanation

The following activity bases are identified for the service departments:

Service Department Activity Base
a. Accounts receivable 3. Number of sale invoices
b. Central purchasing 7. Number of purchase requisitions
c. Computer support 4. Number of computers
d...

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