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Indicate whether each of the following statements is true or false. With the direct method of...

Indicate whether each of the following statements is true or false.

With the direct method of allocating service department costs, the costs are allocated to operating departments only.
For a manufacturing company, service department costs are treated as part of selling and administrative expenses.
The only companies that have service departments are manufacturing companies.
The reciprocal method and the step method of allocating service department costs both allocate some of the costs to other service departments.
Using the reciprocal method to allocate service department costs can cause some distortion of product costs.
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Answer #1

A. With the direct method of allocating service department costs, the costs are allocated to operating departments only- TRUE.

B. For a manufacturing company, service department costs are treated as part of selling and administrative expenses- TRUE.

C. The only companies that have service departments are manufacturing companies- FALSE.

D. The reciprocal method and the step method of allocating service department costs both allocate some of the costs to other service departments- FALSE.

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