Why Are the Costs of Operating Service Departments Allocated to Other

Multiple Choice

Why are the costs of operating service departments allocated to other departments?

A) Many departments consume the services provided by service departments and should be assigned a share of the costs associated with the services consumed.
B) Allocating service costs to other departments for services provided gives department managers incentives to control the use of support services.
C) External reporting regulations (for tax and financial reporting) require allocating manufacturing overhead to the units produced.
D) All of the answers are correct.