CAF-5 · Chapter 2 · Question 5 of 10
Which method of overhead re-apportionment fully recognizes the mutual services provided by two service departments to each other by utilizing algebraic formulas?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: C) Simultaneous Equation Method
Explanation
When service departments provide services to production departments and also to each other, the simultaneous equation method (or algebraic method) is used to mutually allocate costs before charging them to production.
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