Service departments costs should be allocated to:

A. Only Service departments

B. Only Production departments

C. Both Production and service departments

D. None of the production and service departments

Answer: Option C

Solution(By Examveda Team)

The service departments render service (benefit) to the production departments. Service departments may exist to provide services of various kinds to other departments. For example, personnel, maintenance, boiler house, pump house, power generation departments are service departments which provide service to the production and other service centres.